Nelson Mandela
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	Tributes

Lord Hill of Oareford: My Lords, 50 years ago, almost to the day, this House met to pay tribute to a foreign statesman. Then, our tributes were for President Kennedy, a man seen to embody hope and change but whose life was cut short, his promise unfulfilled. Today, we pay tribute to Nelson Mandela, another man who epitomised hope and change but whose life was long and whose promise, towards the end of that long life, was triumphantly fulfilled. Although we are here to pay tribute to his achievements, I know that the whole House will want to send its deepest condolences to Mr Mandela’s family and friends, as well as to the people of South Africa, who have lost their leading light.
	The story of Mr Mandela’s life—from herding cattle, to study, to struggle, to setback, to imprisonment and finally to victory—is so like a fable that it is easy to think that there was always bound to be a happy ending. That was not so. For 27 long years in prison, the struggle must have seemed endless and, at times, without hope. However, Mr Mandela did not give up, nor did he compromise his principles, even when release from prison was dangled in front of him. In his resistance, he was supported by many in this country and, indeed, in this House, most notably by the noble Lord, Lord Joffe. To their great credit, trade unionists, academics, journalists, politicians and people up and down the country campaigned tirelessly for his release. That came in 1990. Elected president of the ANC the following year, he, along with FW de Klerk, won the Nobel Peace Prize in 1993. Then, in South Africa’s first universal and non-racial elections, he became president in 1994. Macmillan’s winds of change had at last blown through South Africa.
	If Mr Mandela’s first historic achievement was the moral leadership that he provided in the overthrow of apartheid, his second was the extraordinary way in which he brought about reconciliation and led his country away from violence and civil war. On his release from prison, he was passionate, not angry, and magnanimous, not bitter. How many of us, if we had been kept in prison for 27 years and been prevented from attending the funerals of our own mother and son, would have had the moral strength and political wisdom to forgive our enemies? That South Africa at last respected the political destinies of free men and did so without a violent revolution was undoubtedly due in large part to Mr Mandela’s extraordinary grace as a human being after his release from prison.
	Having become president, Mr Mandela then stood down after just one term—a rarity among leaders
	from any country. However, the end of his presidency did not signal the end of his work to create a better South Africa. He campaigned tirelessly for more research into HIV and AIDS and for better education and treatment. He named his HIV and AIDS fundraising campaign after his Robben Island prison number and made a huge impact by announcing to the world that his own son had died of AIDS. He used his moral authority on the world stage to persuade other leaders to take action on AIDS, leaving a legacy that will be felt by generations to come.
	Mr Mandela’s statue rightly stands next to Abraham Lincoln’s in Parliament Square. He wears a free-flowing shirt; his arm is raised in oratory and open welcome. His connection with this Building is a real one. In 1996, he addressed both Houses during a state visit as president, making a passionate plea for people around the world to work together to build a new Africa; and, in 2000, he returned to be made an honorary Queen’s Counsel under the noble and learned Lord, Lord Irvine of Lairg, as Lord Chancellor.
	It would be easy to slip into hagiography in talking about Nelson Mandela, but we do not have to pretend that he was a saint to recognise his achievements and his extraordinary power over the imagination of the world. In his inaugural address as President of South Africa, Mr Mandela said:
	“Let freedom reign. The sun shall never set on so glorious a human achievement”—
	a fitting epitaph for the life of Nelson Mandela himself.

2 .45 pm

Baroness Royall of Blaisdon: My Lords, it is a real privilege to lead my Benches in paying tribute to the most extraordinary man, Nelson Mandela, a humble giant with indomitable courage who provided a moral compass for his country, his continent and our world. Today we celebrate his life but, like the noble Lord the Leader of the House, I send our condolences to the family and friends of Nelson Mandela.
	There are few people of whom it can truly be said that their life had an impact on the world, but such was the life of this brave man who, through oppression, understood that evil must never be accommodated or accepted; rather, it must be resisted and overcome. His belief in democracy and a free society was so strong that he was prepared to die for it. Since the announcement of his death, and, indeed, since he guided the South African people to freedom and democracy, the world has rightly revered Mandela, whose dignity, compassion, generosity and power of forgiveness knew no bounds. However, in remembering the peace and reconciliation which became a model for the world, we should not forget the struggle which went before, when he was fighting for the liberation of his people who lived with the evil of apartheid, which crushed “non-violent struggle” with “naked force”. As he said, however, he was fighting not people but principles. In doing so, as the most reverend Primate the Archbishop of Canterbury said yesterday:
	“He faced the insult of being labelled a terrorist”.
	The struggle led to 27 dark years in jail, 18 of them under the brutal regime of Robben Island, but a place where thanks to his leadership there was comradeship
	and a thirst for education, football for fitness and team building, and the vision of a new South Africa was born.
	It is almost beyond belief that when free from prison at the age of 71, he embraced the colossal task of building a society in which all South Africans, both black and white, would be able to walk tall, without fear in their hearts, assured of their inalienable right to human dignity—a rainbow nation at peace with itself in the world. The way in which he did this, with magnanimity, love and understanding of his fellow human beings, as well as with idealism and courage, seemed to show the world that love is stronger than hate and that the human spirit can triumph over inhumanity.
	There are many behind me who are far, far better qualified than me to speak about Nelson Mandela. I am very proud of their actions, but also of my party’s relationship with the ANC in exile, its support for the Anti-Apartheid Movement and its support for political activists and their families through international defence and aid. My noble friend Lord Joffe was a defence lawyer at the Rivonia trial, and who, the accused said after the trial,
	“has understood and accepted that, above all else, we would not compromise our belief or consciences for legal advantage and in that understanding he has advised us along a course which we fully believe to have been politically correct, and legally as well”.
	My noble friend Lord Hughes of Woodside, who cannot be in his place today, was the energetic chair of the Anti-Apartheid Movement for 20 years and was instrumental in increasing its support and focusing its activities in the 1980s, leading the campaign against the Government’s refusal to impose sanctions against South Africa and helping to bring about the end of apartheid.
	My noble friend Lady Kinnock was a tireless fundraiser and supporter of the families of political prisoners, as well as a friend to many in exile. My noble friend Lord Healey introduced Mandela to Hugh Gaitskell in 1962, and later visited him in his cell on Robben Island. My noble friend Lord Boateng was high commissioner in South Africa, which must have been a joy after a lifetime campaigning for justice. Many of my noble friends who worked in trade unions did everything possible to show solidarity with the oppressed workers in South Africa. Other noble friends worked with their churches to bring about change and I know that the vast majority of my colleagues were members of the Anti-Apartheid Movement and that makes me proud.
	My noble friend Lord Kinnock, when leader of the Opposition in the 1980s, was unwavering in his support for Nelson Mandela and the struggle against apartheid. It was when I worked for my noble friend that I had the honour of meeting this legend, when I made and served him tea. As for so many noble Lords, the Anti-Apartheid Movement was part of my political life—indeed, my family’s life: the marches and demonstrations, latterly with children in pushchairs, the careful weekly shop to ensure that nothing from South Africa found its way into the shopping basket—and I played a small part in organising the 1988 Mandela 70th birthday concert at Wembley.
	It was therefore the most enormous pleasure and privilege to shake his hand when he came to meet my noble friend and the shadow Cabinet. I was reminded by Richard Caborn, who in 1990 was an MP and treasurer of the Anti-Apartheid Movement, that at the time Mandela was still deemed by Parliament to be a terrorist and he was unable to book a Committee Room for a meeting with MPs.
	Nelson Mandela was not a saint, he was an exceptional human being who started life in a hut and, like 80% of his fellow South Africans, suffered oppression because of the colour of his skin. His thirst for justice was the catalyst for his training as a lawyer; his hunger for freedom and his passion for equality of opportunity drove him to fight against the evil of apartheid; his empathy and personality enabled him to work with President FW de Klerk, to bring democracy to South Africa; his belief in the power of peace and reconciliation enabled him to lead the citizens of his country to the birth of a new South Africa.
	On Robben Island, the prisoners had a copy of the complete works of Shakespeare, which they called the Bible. Each prisoner marked their favourite passage. Mandela’s was from “Julius Caesar”:
	“Cowards die many times before their deaths;
	The valiant never taste of death but once. Of all the wonders that I yet have heard, It seems to me most strange that men should fear; Seeing that death, a necessary end, Will come when it will come”.
	It is clear that Nelson Mandela died only once. There are many apposite quotations from Shakespeare, but I will end with Ben Jonson’s words about Shakespeare, which sum up the truly great but humble and compassionate Mandela. His genius,
	“was not of an age, but for all time”.

Lord Wallace of Tankerness: My Lords, I associate those of us on the Liberal Democrat Benches with the condolences expressed by the Leader and shadow Leader of the House to the family of Nelson Mandela and to the people of South Africa.
	It is a reflection of the stature of Nelson Mandela, of a life conspicuous for the breadth of his humanity, and the profundity of his messages of reconciliation and inspirational hope, that tributes such as this will be being paid in parliaments and assemblies on every continent. But more than that, as befits a man who radiated such humility, tributes and prayers have been said not just by Prime Ministers and Presidents, but by ordinary people of every colour and creed.
	I never had the honour of meeting Mr Mandela, but as he was leaving Westminster Hall after addressing both Houses of Parliament in 1996, he stopped at the end of the row I was sitting in to talk to two young children. I suspect that the noble Baroness, Lady Boothroyd, remembers that he stopped at the end of many rows. I cannot put adequately into words the experience. Yes, it was his humanity; maybe, too, it was the proximity of someone who had endured so much and subsequently achieved so much for his people and his country; maybe it was his challenging
	words still ringing in my ears; but to say that his presence was magnetic would barely start to describe the aura of the man.
	However, on the one occasion in my political life when my responsibilities brought me into Nelson Mandela’s orbit, I confess that I had to dare to disagree. Although he had wished a court in a neutral country with international judges to try the two men accused of the bombing of Pan Am flight 103 over Lockerbie, President Mandela’s initiative eventually led to the handing over of the two men and their trial in the Scottish court in the Netherlands. In 2002, he visited the one man convicted, Abdelbaset al Megrahi, in Barlinnie prison. The BBC’s “Reporting Scotland” that night had an interview with Mr Mandela calling for Mr Megrahi’s removal to a prison in a Muslim country such as Egypt or Tunisia to serve out his sentence. This was followed by an interview with me, as Scottish Justice Minister, saying that the Scottish Government’s view was that we should abide by the UN resolution establishing the process, whereby any sentence would be served in a Scottish prison. Watching the programme at home in Orkney, my teenage daughter asked my wife, “So does that mean Nelson Mandela’s criticising my dad?”. When Rosie replied, “Probably, yes”, Clare thought for a moment and said, “Now that’s cool”.
	That underlines the point that Nelson Mandela’s legendary status was understood and recognised across the generations as well as across continents. Young people who could not possibly remember his walk from prison, or the crowds waiting to vote in South Africa’s first properly democratic elections, nevertheless recognise that they have been alive during the lifetime of such a towering figure. And just as we, today, revere names of past generations such as Lincoln, Wilberforce, Gandhi, who championed the struggle for freedom, so too will future generations revere the name of Nelson Mandela—a man who transcended generations just as he bridged cultures and healed divisions; and just as he did when he addressed us in 1996. He did not shy away from reminding us of our colonial record or the dismissive response given by our forebears in the early years of the last century, when, as he said, his,
	“predecessors in the leadership of the African National Congress came to these venerable Houses to say to the government and the legislators of the time that they, the patricians, should come to the aid of the poor citizens”.
	But consistent with his powerful message of reconciliation at home, he talked to us about “closing the circle”, and said:
	“Despite that rebuff and the terrible cost we had to bear as a consequence, we return to this honoured place neither with pikes, nor a desire for revenge, nor, even, a plea to your distinguished selves to assuage our hunger for bread. We come to you as friends”.
	He concluded by challenging us:
	“To close the circle, let our peoples, the ones formerly poor citizens and the others good patricians—politicians, business people, educators, health workers, scientists, engineers and technicians, sports people and entertainers, activists for charitable relief—join hands to build on what we have achieved together and help construct a humane African world, whose emergence will say a new universal order is born in which we are each our brother’s, or sister’s, keeper … and herald the advent of a glorious summer of a partnership for freedom, peace, prosperity and friendship”.
	Our lasting tribute to Nelson Mandela is to take that challenge to our hearts, and respond with our actions.

Lord Laming: My Lords, on behalf of my colleagues in the Cross-Bench group, may I be associated with the moving and well earned tributes to the life of Mr Nelson Mandela, who was such a towering person? We send our condolences to his family. I did not have the honour to meet Mr Mandela so, like many others, my regard for him and all that he stood for stems from his speeches and writings and from the reports of his actions.
	It is impossible even to attempt to record all that Mr Mandela gave, not just to his country or to the continent of Africa, but indeed to the whole world. That so many people from across the world, be they rich or poor, powerful or weak, high or lowly, now hold him in such amazingly high regard, even though he did not attain public office until he was well into his 70s and was in office for only one term, speaks volumes about his personal greatness. Others have portrayed the life of Mr Mandela with greater eloquence than I can, but I will simply try to highlight four qualities of his that I am sure will endure.
	First, he demonstrated over and over again his faithfulness to his beliefs. He had the courage, determination and discipline to stand firm, even if it meant spending many years in prison and separation from his family. As an aside, I suggest that Governments across the whole world should learn from his life: while oppression may appear to succeed for a time, the human spirit of brave people like Nelson Mandela will never be crushed. Secondly, wherever he was, he accorded to each his genuine belief in their unique, individual quality. He was always able to treat each one of his fellow human beings as being on life’s journey, whatever their role or status. Thirdly, he conveyed an inner sincerity and humility that made him really want to learn from others, even his jailers, irrespective of colour, creed or nationality. He was at heart someone who loved and respected his fellow human beings, and it showed. Fourthly, he had a lifetime commitment to unity; we all know that conflict is commonplace and often the easy option, whereas bridge-building, reconciliation and harmony are very much harder won. Nelson Mandela was at heart a unifier. The world needs more people with his special qualities.
	What is the legacy that he has left for us and future generations? I suggest that over and above his intellectual qualities, his legal skills and his political instincts, he had one quality that found expression in everything and that will remain a challenge to us all: his generosity of spirit that he accorded to friend and foe alike. He had an inner generosity that enabled him to treat everyone, whatever their beliefs, with a pervasive dignity. We may not achieve the higher human qualities that characterised Nelson Mandela, but surely it is no defence if we fail to strive to emulate what he was able to achieve.
	In the final paragraph of his autobiography, Long Walk to Freedom, Mr Mandela wrote:
	“I have walked that long walk to freedom. … But I can rest only for a moment, for with freedom comes responsibilities, and I dare not linger, for my long walk is not yet ended”.
	This part of his long walk has ended. He has left the world a better place and his achievements will endure. May Nelson Mandela now rest in peace.

The Lord Bishop of Truro: My Lords, I am keen to associate myself and all my colleagues who sit on these Benches with the tributes paid to Mr Mandela here and throughout the world. The focus on one man is extraordinary, but it is entirely right, for he was extraordinary. My thoughts and prayers go to all his family and friends and indeed to everyone in the whole country of South Africa, who have lost a father.
	Two words have been repeated many times in the millions of words spoken about him: humility and dignity. In matters of faith, although he was baptised into the Methodist Church and went to a Christian school, he believed that religion was a deeply personal and private affair, yet the way that he lived out his faith by challenging unjust structures, and then through public service, was an example to all of us. He believed in the old African proverb that we are people through other people and that only by recognising the humanity in others do we ourselves become truly human. It was this reconciling message that Mandela lived out daily.
	A priceless gift that Nelson Mandela gave us was helping us to understand forgiveness and healing through truth and reconciliation, thus enabling both the victim and the oppressor to progress. He fought a racist power structure but, when he gained legitimate political power, he did not answer racism with racism. He said, “We are not anti-white but against white supremacy”. He was a living testament to integrity and dignity—a courageous man who sacrificed his freedom for the elimination of racial oppression.
	As well as prayers being said for Nelson Mandela and South Africa in churches up and down the country yesterday, as I am sure noble Lords are well aware, readings from the Old Testament prophets, and in particular yesterday readings from the New Testament featuring John the Baptist, will have been heard during services on the second Sunday in Advent. It strikes me as entirely appropriate that we should consider prophecy and prophets as we pay tribute to Nelson Mandela, who was himself a prophet.
	Like most of us, I suspect, I am surprised at how someone who suffered as he did and was brought up under such circumstances as he was maintained his humility and dignity and ensured the downfall of an unjust regime. As we pay tribute to such an extraordinary man, it is far too early to talk properly of legacy, yet I wonder whether one reflection for all of us is what injustices and evils we are in danger of being comfortable with and complacent about in our time.
	Prophets surprise and challenge us; so did Nelson Mandela. I find it hard to believe that I could survive and remain as humble and as dignified as he did if I had experienced circumstances similar to his. For me, the key question is: am I listening to the prophets, who are now pointing me to the issues about which I am in
	danger of being blind and deaf? How might we ensure that our fellow human beings are properly surprised and so change their way of life? May he, Nelson Mandela, rest in peace and may his prophetic humility and dignity, and that strong smile, continue to affect each and every one of us in our long walk to freedom.

Lord Joffe: My Lords, on Monday, 24 April 1964, Nelson Mandela, on trial for his life for planning a revolution to replace the apartheid Government, delivered his historic speech from the dock at the Palace of Justice in Pretoria. He ended with the words:
	“I have cherished the ideal of a democratic and free society in which all persons live together in harmony and with equal opportunities. It is an ideal which I hope to live for and to achieve. But if needs be, it is an ideal for which I am prepared to die”.
	We, his lawyers, had advised him to delete the “prepared to die” sentence, because it could be construed by the judge as an invitation to hang him. His response to our advice was that it was necessary for him to make that declaration, so that his people would understand that no sacrifice was too great in the battle for freedom. This would inspire them to carry on the battle when he was no longer there to lead them.
	It was this indomitable courage which was the hallmark of Nelson Mandela. As a leader he epitomised leadership, political genius, integrity, justice, forgiveness, generosity and humility. As an individual he was warm and friendly, with a natural charm, keen sense of humour and an infectious laugh. He treated everyone as equals and with warmth and respect. For all these qualities to come together in one human being, to such great purpose, is unique.
	Understandably, Nelson Mandela is revered and adored by all in South Africa, and beyond. He will endure as the inspiration for all their hopes for the future. It is a great privilege for me to pay tribute to the most revered and loved statesman of his time, and to be able to do this in your Lordships’ House. He always valued the support of the British people in the fight against apartheid and was a great admirer of our Parliament and this House. When I last met him about three years ago in his home in Johannesburg, he was sitting on a low sofa in his living room. Being quite frail, he struggled to rise. I said, “Madiba, please do not get up for me”, and he, with a mischievous twinkle in his eyes, replied as he rose, “I always stand up for a member of the House of Lords”.

Baroness Boothroyd: My Lords, rightly, much has been said about Nelson Mandela’s genius at forging friendships across the divide of politics and creating unity out of discord. I saw him demonstrate this skill during his state visit to Britain in 1996. It is among my most treasured memories. He was undoubtedly the greatest statesman to visit Westminster in my lifetime.
	I witnessed his self-discipline and professionalism when he made his memorable address, void of all bitterness, to the joint session of Parliament in Westminster Hall. I was worried about him negotiating the narrow steps of that hall, worn by a thousand years of history.
	I had warned him about them at the state banquet in Buckingham Palace the night before and I did so again next morning. “Don’t worry, Madam Speaker”, he said, when we met at St Stephen’s entrance. “I came to look at them at 6 o’clock this morning”. What a man he was. The trumpets sounded and with that he took my hand and we mounted the steps of St Stephen’s and into great Westminster Hall. He was then 78 years old. After the ceremony he made straight for Margaret Thatcher, who was in the audience, smiling happily, hand outstretched. She had branded him and the African National Congress as terrorists and she had resisted punitive sanctions against apartheid. But Mandela held no grudges. He said he hated apartheid—not white people.
	Naturally, he will be remembered as South Africa’s first black president. But that was only half his achievement. What matters perhaps even more is that he was South Africa’s first democratic president—the first, we hope, in a long line of democratic leaders who will safeguard his legacy.
	I was Chancellor of the Open University when we last met. I went to Cape Town to present him with the OU’s honorary doctorate. He was very fragile even at that stage, but he was gracious and as modest as ever. “I’m all right”, he told the press at a press conference afterwards, “Don’t worry, I’m all right”. He said, “I will tell you one thing. As soon as I get to those pearly gates you can be sure that I shall join the local branch of the ANC”.
	There was no artifice about him. He believed in old-fashioned courtesies, tolerance and conciliation—qualities our own political leaders would do well to try sometime. But he was no stranger to discord. Mandela held the moral high ground and he created a rainbow nation shorn of the colour bar.
	Much remains to be done in South Africa but his achievement set him apart among world leaders. He dispelled the racial prejudices that oppressed his people, disgraced its perpetrators and held his country back. He believed that the point of freedom was to make others free.
	Goodbye Madiba, may we follow where you led.

Lord Howe of Aberavon: My Lords, very briefly, perhaps I may add to the impressive tributes that have been paid by noble Lords on all sides of the House and reflect on the period, almost 30 years ago, when the Commonwealth was taking action as widely as it could to try to secure improvements in conditions in South Africa. It commissioned a group of wise men, who were sent out there to see what could be done at a time when Nelson Mandela had already spent 27 years on Robben Island. When the two selected—Tony Barber, a former Minister in this country, and Malcolm Fraser, a former Australian Prime Minister—went in to see Nelson Mandela, his first, most impressive, question was, “Can you tell me, is Don Bradman still alive?”. What more could he have said, even there, to those two in the prison and to the rest of us back here in Britain, to underline his qualification as something more than a citizen of South Africa—as
	a citizen of the world indeed? On that basis, I am sure that he deserved the support that he was already enjoying at that time.

Lord Kinnock: My Lords, for 50 years since I first campaigned against apartheid in the wake of the Sharpeville massacre, Nelson Mandela has been a supreme inspiration to me. He showed unsurpassed bravery and endurance in his fight against oppression and unequalled humanity in his guidance to South Africa and the world. He had the strength to be merciful, the wisdom to be gentle and generous. I salute those qualities of truly great leadership. It was a marvellous privilege to meet Mandela the hero, a delight to know Nelson the man. I cherish memories of times together, of his mischievous humour and of his dazzling smile. To be called “comrade” by such a man was an irreducible honour. I join with countless others, here and across the world, in offering my affection and deepest sympathy to Graça, his widow, and to their family.
	Nelson Mandela never forgot the past of hatred and bigotry, of searing injustice and violence, but from the outset his political life was resolutely committed to plotting, planning and building for a different future with his people. It was that which drove him to take up arms. It was that which gave him the resilience to withstand captivity and its dreadful indignities and tragedies. It was his fixation with the future that could be created which, in the late 1980s, made him withstand the proffered comforts of compromise and instead gain the courageous agreement of FW de Klerk to release him unconditionally and to prepare for non-racial democracy. It was Mandela’s dedication to the future which, above all, made him exert his full authority as a warrior, a convict and a leader to compel reconciliation when vengeful reprisal could have brought remorseless racial civil war and desolated South Africa.
	As we pay tribute to Mandela’s determined and valorous idealism, we must do him the justice of recognising his daring realism. In this House, evolved through centuries of conquest and preferment, I would not lecture the leadership of a 19 year-old democracy about its conscience or its duty. I do not need to. In the most explicit terms, Mandela himself charted the course that must be followed. At the Rivonia trial, at which my noble friend Lord Joffe played a brave and distinguished part, when Nelson and his comrades were faced with the lethal probability of execution, he said in plain, provocative words which have resonated through the decades, as we have already heard from my noble friend:
	“I have cherished the ideal of a democratic and free society in which all persons will live together in harmony and with equal opportunities. It is an ideal which I hope to live for and see realised. But, my Lord, if it need be, it is an ideal for which I am prepared to die”.
	He did live for that ideal, but did not see it realised. But he dedicated his life to securing the conditions in which it could be fulfilled by free people, governed by mortals who apply a measure of the integrity, dignity, bravery and sagacity that were central to Nelson Mandela’s being.
	That was his true legacy. Honouring it must now surely propel the current leadership of the ANC into embracing reform and transparency, strengthening accountability and combating the self-indulgence and corruption which so retard Mandela’s beloved country and its people. If that course is not taken, Nelson Mandela will be their brilliant, brave, but unrequited dead hero. If it is taken, as he would have wanted, he will have a fitting, enduring, living memorial of full freedom in South Africa. He deserves that and South Africa sorely needs it.

Baroness Williams of Crosby: My Lords, in 1990 I was in South Africa with my husband, doing something that Mandela had asked others to do, namely beginning the training of young Africans to fill places in the civil service, which they would have to do almost immediately if there was truly to be a rainbow nation and truly to be a South Africa that both administratively and politically represented all the peoples of that great republic.
	We were in South Africa at the time Mandela came out of prison. I remember watching the march as he removed himself from the terrible, hellish place in which he had been, and recognising that there was the sense that day that the sun had risen over South Africa—a wonderful moment. I would like also to pay great tribute to the noble Lord, Lord Joffe, who was indeed a crucial part of the construction of a democratic South Africa.
	One other thing which is important is that one of the very closest friends that Nelson Mandela had was the famous white South African, Helen Suzman. I mention her because he was extremely close to her and because some of us remember two things. First, there was never a month that passed in which she did not visit Nelson Mandela on Robben Island, against all the opposition that the Administration of white South Africa could produce. Secondly, and at least as importantly, we should remember on this occasion that from 1961 to 1974—13 bitter years—Helen Suzman was the only opponent in that Parliament of every aspect of apartheid. That meant that she was spurned, abused and, in some cases, threatened. Yet, day after day, her courage did not fail and she matched that of her dear friend and much beloved leader, Nelson Mandela. So on this occasion, as we celebrate that great man, I hope that we will celebrate also those men and women of all races who had the courage and strength to support him in what he did and who will be, in many ways, part of his lasting memorial.

Lord St John of Bletso: My Lords, I wish to add a few words of tribute as one who lived in South Africa for 28 years of the 40-year apartheid regime and one who had the good fortune of getting to know Nelson Mandela, known to us all as Madiba, over many occasions. I shall remember him for his charming and engaging smile, his empathy and humility, his
	magnanimity, his vast self-confidence and pragmatic approach to life as well as, most importantly, his forgiveness and mantra of inclusivity.
	There is no doubt that Madiba will be remembered as one of the most important and distinguished politicians of the past century. He will be remembered as a universal icon for his lack of bitterness, after 27 years of incarceration, and for his incredible negotiating skills in achieving peace and reconciliation in a country where most of us believed that civil war would be inevitable. One of the most remarkable achievements in South Africa was for him to persuade the Afrikaners to agree to a peaceful settlement. It is well known that in his last five years in prison, he had no fewer than 70 secret meetings with Kobie Coetsee, the Minister of Justice, and Niel Barnard, the national intelligence chief, to explore the possibility of a political accommodation between blacks and whites.
	After his release, his agile negotiations on the national anthem and his support for Francois Pienaar ahead of the Rugby World Cup changed the minds of everyone in South Africa, both black and white, and created unity in what was, no doubt, the most racially divided country in the world. His death has further inspired the youth and forces for positive change in South Africa to achieve the rainbow nation and follow his legacy.

Baroness Kinnock of Holyhead: My Lords, I was privileged to meet Nelson Mandela on several occasions. On each occasion, I was inspired by him and marvelled at his strength and courage. I am also proud to report that he poured me a cup of tea at his home in Soweto, soon after his release; indeed, I can boast that I have been hugged by him.
	From the 1960s until the end of the 1980s, in the anti-apartheid movement we struggled with the idea that apartheid could be overcome peacefully, but we knew that it would eventually end as a political system, leaving in its wake the misery and suffering that it had created. We watched from afar those barricades of burning tyres and the street battles fought in the townships by unarmed youngsters against a well armed and brutal police force set upon destroying black opposition. In desperation, Nelson Mandela advocated and engaged in the armed resistance in the early 1960s, but it was he who insisted upon peace and reconciliation when the white minority eased its grip on power 30 years later.
	Like others here today, I joined the anti-apartheid movement in the 1960s and can confirm that that wonderful solidarity movement, through every form of persuasion—from letters to newspapers, mass picketing and demonstrations to rugby and cricket pitch invasions—was able to play a part in shifting public opinion and in exposing the apartheid regime as an international pariah. It is, indeed, regrettable that the anti-apartheid movement did not enjoy the support of the Government or the Prime Minister of the day. However, I believe that the world is a better place because of the solidarity that was shown in those dark days, with South Africans seeking justice and freedom.
	Nelson Mandela publicly emphasised the contribution made by those efforts in the United Kingdom to isolate the apartheid state.
	Now we mourn the man who achieved so much, who challenged the might of white minority apartheid and who forged a new rainbow nation after 27 years in prison. In the last few days we have realised how much he meant to us and how much respect and affection he has earned across the world. He was loved and he will be missed, not least by his beloved wife, Graca Machel. I can only imagine her great sadness at her loss. It was she who gave him love, trust and real happiness. Nelson famously said that Graca made him “bloom like a flower”; we know that she will be feeling deeply her loss at this time.
	Other noble Lords have mentioned Nelson Mandela’s visit as the first democratically elected President of the Republic of South Africa to speak to the joint Houses of Parliament in 1996. He said:
	“We are in the Houses in which Harold Macmillan worked: he who spoke in our own Houses of Parliament in Cape Town in 1960, shortly before the infamous Sharpeville Massacre, and warned a stubborn and race-blinded white oligarchy in our country that,
	‘the wind of change is blowing through the continent’;
	he to whom a South African cartoonist paid tribute by having him recite other Shakespearean words,
	‘Oh, pardon me thou bleeding piece of earth,
	That I am meek and gentle with these butchers!’”.
	Then he said:
	“We have come as friends to all the people of the native land of the Archbishop Trevor Huddleston”—
	a great friend and comrade to Madiba—
	“who in his gentle compassion for the victim, resolved to give no quarter to any butcher”.
	He went on to emphasise the nature of the relationship between South Africa and Britain, which was,
	“not one between poor citizens on the one hand and good patricians on the other, but one underwritten by our common humanity and our human capacity to touch one another’s hearts across the oceans”.
	No one could have articulated the great cause of liberty and solidarity better; and no one did.

Lord Bilimoria: My Lords, I returned today from India, having attended the UK-India Round Table. We started our meeting on 6 December with two minutes’ silence for Nelson Mandela. In fact, India has declared state mourning for five days. We could not even consume alcohol at the meeting.
	I was born and brought up in India and married my South African wife a year after Mandela was freed in 1990. When I first visited the Free State she came from, my family there told me, “If you had come just a few months earlier, no Indian was allowed to spend the night in the Free State”. An Indian whose car broke down on the way from Johannesburg to Durban would report to the police and invariably would have to spend the night in jail. Things have changed, thanks to Nelson Mandela and President F W de Klerk.
	One individual who has not been mentioned in these amazing tributes is Archbishop Desmond Tutu.
	He is the one who has spoken about the word “ubuntu”, which anyone who has been to South Africa knows about. The person who personified ubuntu was Nelson Mandela himself. As he said, ubuntu is about not enriching oneself but putting back into the community with human kindness. We can see that in his lack of bitterness, his ability to forgive and that saying of his:
	“No one is born hating another person because of the colour of his skin, his background, or his religion. People must learn to hate, and if they can learn to hate, they can be taught to love, for love comes more naturally to the human heart than its opposite”.
	What about Mahatma Gandhi? Nelson Mandela was a huge admirer of Gandhi. In fact, he said:
	“India is Gandhi’s country of birth; South Africa his country of adoption. He was both an Indian and a South African citizen”.
	He also said:
	“Both Gandhi and I suffered colonial oppression, and both of us mobilized our respective peoples against governments that violated our freedoms”.
	Is it not amazing that these two men had difficulties with our two great Prime Ministers—Mahatma Gandhi with Winston Churchill and Nelson Mandela with Lady Thatcher?
	The noble Lord, Lord St John, mentioned the great rugby victory. In prison on Robben Island, Mandela would often quote the poem “Invictus” by William Ernest Henley, and its last lines:
	“I am the master of my fate:I am the captain of my soul”.
	Mahatma Gandhi’s most famous saying applies better to no one else—ever, ever—than Nelson Mandela. I will paraphrase it: “Your beliefs become your thoughts. Your thoughts become your words. Your words become your actions. Your actions become your habits. Your habits form your character and your character determines your destiny”. Mandela has been an inspiration not just to his country, the world or this generation but for ever more.

Lord Morris of Handsworth: My Lords, today we have heard about Mandela the great world leader and Mandela the statesman. I take the opportunity to share my experience of Mandela the ordinary man, whom I had the privilege of meeting on four separate occasions.
	On the first occasion, I was in my office and the telephone rang. It was the leader of the Labour Party, the late John Smith. He said, “Can you come to the office? There is someone here I would like you to meet”. I walked in, Mandela was sitting there and I did a double-take. The conversation developed around the question of how we could shape a political party on the basis of equity of all the constituents—the people who matter. At that time, my party was debating one person’s shortlist and how we could bring more women within the context of our party’s leadership. John Smith turned to Mandela and said, “Nelson, our research tells us that within the ANC constitution there is equity. But we also researched your office and we note that there is a preponderance of women against men in the presidential secretariat. How did you cope with all that?” Nelson said: “It was worse than being in Robben Island”.
	My second experience was when I led a delegation on behalf of my union to South Africa. Naturally, we went to Johannesburg and it was all set up for me to meet Mandela. I met him on time and he signed a copy of his autobiography, The Long Walk To Freedom. After about 20 minutes or half an hour, he said, “I am very sorry but I must curtail this discussion, interesting as it is, because I have to get down to Cape Town. I have a very important statement to make to Parliament”. We said our goodbyes. I noted on the evening news that it was the day that he advised Parliament that the relationship with Winnie had come to an end and she would play no further official role within the spheres of government.
	My last meeting was as a member of the receiving delegation at Brixton. I was standing in the line. He came up to me and said, “You are the man who nearly made me miss my plane”. He did not miss his plane, but the world will certainly miss him.

Baroness Anelay of St Johns: My Lords, we have had remarkable tributes, very much like the man himself. The noble and learned Baroness, Lady Scotland, has been waiting to contribute for some time and has graciously given way to other Peers. I feel that the mood of the House is to wish to hear from the noble and learned Baroness, Lady Scotland, and then perhaps to move on to the Orders of the Day.

Baroness Scotland of Asthal: My Lords, I thank the House for tolerating one last speech. As a child of the 1960s, I was much influenced by the events in South Africa, events that struck me at such a tender age as being pivotal to my upbringing. Apartheid robbed people, both black and white, of their humanity, because it damaged the souls of those who inflicted it on others as much as it damaged those men and women who suffered from it. It was extraordinary that although many people feared that South Africa would be robbed of its humanity for all time, apartheid did not rob Nelson Mandela—Madiba—of his humanity. Throughout all the stress, the strain and the pressure of those years, he remained quintessentially human, kind and loving.
	That love spread right across the world and allowed young people like me to think that it was possible to join the legal profession, possible to become part of the rule of law and possible to facilitate change. That change was fundamental not only to South Africa but to our country, the United Kingdom. How many people in the 1960s would have thought that one day we would have a black, female Attorney-General? But we did, because our humanity has changed and Nelson Mandela helped us to make that change.
	We have also benefited from the jurists who came from South Africa to help us here, not just my noble friend Lord Joffe, but also the noble and learned Lords, Lord Scott of Foscote and Lord Steyn, whom I see on the Bench. Those eminent South African jurists ran from South Africa and from apartheid, but they enriched our humanity by enriching our jurisprudence. I give thanks to South Africa for them, and I give
	thanks for the life of Nelson Mandela. To those who loved him he was Madiba, and all those who knew him were among that number.
	One of the most special things about him was that he did not differentiate between men and women, and from my experience he loved women very much. I am not at all surprised that he showed the good judgment to surround himself with women at all times, to give him counsel, to add to his wisdom, to enrich his life and to make sure that he kept on the straight and narrow path. I join my voice with all those who say that we not only greatly enjoyed his presence but deeply loved and appreciated what he did for his country and what he did for each of us.

Burma
	 — 
	Question

Baroness Cox: To ask Her Majesty’s Government what is their assessment of recent developments in Burma with regard to the situation of the ethnic national groups, in particular the Kachin, Shan and Rohingya peoples.

Baroness Warsi: My Lords, we welcome continuing talks between the Burmese Government and ethnic groups, including the Kachin and Shan, towards a nationwide ceasefire and political settlement. We are, however, concerned by recent reports of fighting in Kachin state and continue to argue for full humanitarian access. We continue to monitor tensions in Rakhine state and press for improved security and accountability, better co-ordination of humanitarian assistance and a solution to the question of Rohingya citizenship.

Baroness Cox: My Lords, I thank the Minister for her encouraging and helpful reply. Is she aware that I have visited Kachin and Shan states, where I have seen massive civilian displacement, widespread suffering caused by the Burmese army’s continuing military offensive and violations of human rights? Therefore, the proposed engagement of the British Army with the Burmese army is causing such anxiety that ethnic national leaders have written a letter highlighting their concerns. What assurance can the Minister give that this co-operation will provide no enhancement of Burmese military capacity for further assaults on its civilians but will be conditional on progress on the protection of human rights and a genuine peace process?

Baroness Warsi: As ever, my Lords, the noble Baroness comes to Question Time with the most up-to-date information, and I very much value her input. As she will be aware, the Burmese military is a core political force in Burma. It is therefore important that professionalism and human rights as an essential element of the work they do is part and parcel of their training.
	The focus of our defence engagement in Burma is on adherence to the core principles of democratic accountability, international law and human rights. We have been delivering a course—a course which has been delivered in many other parts of the world—that specifically focuses on the professionalisation of the work that the army does. The Chief of the Defence Staff visited Burma earlier this year to deepen that engagement. I can assure the noble Baroness and other noble Lords that we will not be involved in the sale or transfer of arms or military equipment or play a part in military combat. We are involved in the professionalisation and accountability that the Burmese army needs to be aware of when conducting operations.

Baroness Berridge: My Lords, Aung San Suu Kyi stated that Nelson Mandela made us all understand that nobody should be penalised for the colour of his skin or the circumstances into which he was born. Sadly, the Rohingya Muslims are still being persecuted on grounds of their race, ethnicity and religion. What representations are Her Majesty’s Government making to the Burmese Government that they should sign up swiftly to the basic international norms in the International Covenant on Civil and Political Rights? Without such a commitment, how can the Minister assure the UK taxpayer that our aid is being distributed without discrimination?

Baroness Warsi: The discrimination against the Rohingya community and, indeed, against Muslims in other parts of Burma, is a matter of huge concern. It was raised at the highest level by the Prime Minister in discussions with President Thein Sein when he visited earlier this year. It is important for us to respond to the deteriorating humanitarian situation on the ground in relation to the Rohingya community and to deal with the long-term issue of citizenship. My noble friend has made an incredibly important point. The basis of the argument used by the Minister who raised the issue with me was that the Rohingya were not really members of the Burmese community because they looked different, they had not been in the country long enough and they were from a different religion. I am sure that the irony of that was lost on the Burmese Minister when he was talking to me.

Baroness Kinnock of Holyhead: My Lords, a national census is due to take place in Burma in 2014, as I am sure the noble Baroness knows. It has largely been funded by the United Nations and, as I understand it, the UK will contribute $16 million. In view of the appalling levels of religious and ethnic discrimination in Burma, does the Minister anticipate that the Rohingya—who are not officially recognised, as we have heard, as one of the country’s ethnic groups—will be included on equal terms in that census? In view of that reality, how do our Government intend to ensure that the UN guarantees a complete count of the population of Burma?

Baroness Warsi: This is a hugely controversial issue in Burma. There are concerns about the way in which the Government would like to define the Rohingya
	community, not so much as Rohingya but as Bangladeshis—I think that they want to define them as Bengalis. We have raised this issue. Some recommendations were made in the internal report that was done, and the President made some positive comments. We have also put forward evidence that shows the length of time that the Rohingya community has lived in Burma. I am not sure that I can give the noble Baroness a specific answer but I will write to her with further details.

Baroness Falkner of Margravine: My Lords, given that my noble friend has mentioned humanitarian assistance, can she tell us what discussions the Government are having with Burma’s neighbours about the people from all the tribes that the noble Baroness, Lady Cox, mentioned, who are displaced across Burma’s boundaries? Particularly in light of the forthcoming census, are the Government supporting efforts to identify those who should rightly be identified as Burmese but are displaced externally?

Baroness Warsi: We have of course had discussions not just within Burma but with the Thai authorities. I had an opportunity to discuss the matter with the Bangladeshis and, indeed, had an opportunity to visit Cox’s Bazar, where there are large numbers of the displaced community. We have committed £180 million up to 2015, which is specifically humanitarian assistance. Some of that is for use in relation to individual communities, such as the Kachin and the Rohingya, within Burma, but some is for peacebuilding and support along the Thai-Burmese border. I am not sure that I caught all of my noble friend’s question because of the noise but I hope that that answers it.

Lord Alton of Liverpool: My Lords, has the noble Baroness had the opportunity to look at the Human Rights Watch report that has categorised what is happening to the Rohingya people as genocide, and said that what is happening in Kachin state amounts to war crimes in the perfectly technical sense, not just in the rhetorical sense? Given those allegations, can she tell us what the Government are doing about raising that issue, particularly in the Security Council? Does she accept the underlying point that the ethnic minorities in Burma are in grave danger of being exploited more and more as the country opens up, and that more needs to be done to protect them during this process of opening up?

Baroness Warsi: Yes, I amfamiliar with the report; and alongside that report we have our own disturbing and specific allegations which have been backed up by comprehensive evidence. However, at this stage we feel that rather than a UN-mandated inquiry, it would be better and probably more likely to be effective if it were done internally by the Burmese, and we have been encouraging them to go down that route. The noble Lord will also be aware that the Burmese Government have agreed to open up an OHCHR office. The President made a commitment to an office with a full mandate but it has not at this stage been fulfilled. The noble Lord may also be aware of a recent
	UN Third Committee resolution which focuses on concerns about the delay to the opening of that office. We think that the opening of an office with a full mandate is one of the ways in which we could take forward some of these concerns.

Equality and Human Rights Commission: Funding
	 — 
	Question

Baroness Prosser: To ask Her Majesty’s Government which of the Equality and Human Rights Commission’s proposed programme bids will be funded; and, for those that will not be funded, why not.

Baroness Northover: My Lords, the process for the commission to access additional programme funding is set out in its framework document. The Government have now approved, in whole or in part, more than half of the bids submitted by the EHRC under this facility. The main reason that the remaining bids were not approved was concern over their value for money.

Baroness Prosser: I thank the Minister for that reply. In light of the Government’s recent successful application for membership of the UN Human Rights Council, could she explain how she hopes the Equality and Human Rights Commission, which is recognised by the UN as the independent watchdog for human rights in Britain, will work with civil society to monitor our compliance with the human rights treaties to which the Government are a signatory? Will the Government, as they indicated in their application to the UN, actively support the commission in this work and thereby reconsider the decision not to allocate funds for capacity-building in NGOs around UN treaty monitoring?

Baroness Northover: I pay tribute to the noble Baroness for the work that she has done in this area. As she knows, the EHRC has its core funding for its core responsibilities and, obviously, in relation to the UN Human Rights Council, that is part of what it is doing. The grants that were rejected were rejected because they either duplicated what others were doing or were regarded as poor value for money. On building capacity for NGOs to contribute to UN treaty monitoring, there was a concern about duplication because many of the bid’s constituent parts may already be provided by others, including the voluntary sector.

Baroness Hussein-Ece: My Lords, under Article 33 of the UN Convention on the Rights of Persons with Disabilities, the Government are obliged to fund disabled people and organisations that support them. Is this still the case, given the changes that have recently been made?

Baroness Northover: We are very much committed to working with disabled people and their organisations. As I said, the EHRC has some core responsibilities; as regards those grants, we are talking about additional
	areas for which the EHRC put in bids. I can assure my noble friend that the EHRC plays an important part in the independent mechanism for monitoring the convention. A number of the EHRC’s bids for additional funding have not been approved in this instance because of the concern about value for money. However, that does not affect the EHRC’s core budget and its responsibilities.

Baroness Royall of Blaisdon: My Lords, the Minister says that only half the bids have been agreed to, which I understand. What plans, if any, are being made for the money that has not been allocated? What do the Government propose to do with it?

Baroness Northover: I do not have any information about what would happen to money that has not been allocated. Nine bids were submitted and five of them have been approved. One of them was somewhat contingent on the progress made within that bid, after which further money will be brought in if it goes well. However, I do not have any information about the money that is left over.

Lord Lea of Crondall: My Lords, we are told that core funding is okay because that is a totally separate question. However, one’s impression is that we passed legislation with a need to implement it through secondary legislation, and the EHRC has many times been given the responsibility to monitor and implement that secondary legislation. Is the Minister saying that the core funding is keeping pace with all the extra secondary legislation that we are asking the EHRC to implement?

Baroness Northover: I am sure that the noble Baroness, Lady O’Neill, will come and tell us one way or the other. However, my understanding is that the Ministers responsible are working very closely with the EHRC—I am very glad to see the noble Baroness, Lady O’Neill, nodding—to ensure that it can focus on those core responsibilities. There was, as the noble Lord will probably remember, a previous concern—for example, from the National Audit Office—that some of the extraneous activities around the edge were taking away from those core responsibilities. The bids here do not relate at all to the monitoring of how statutory instruments and so on might operate. That would all be part of the core responsibilities. To come back to the previous question, neither would one assume that all bids would automatically be approved—to do so would be fallacious. Just because the EHRC put in bids for the amount up to the limit of what might have been available, that should not indicate that it will all be allocated if all those bids do not pass the same tests as those that were accepted.

Visas: Artists and Entertainers
	 — 
	Question

The Earl of Clancarty: To ask Her Majesty’s Government whether they have plans to improve the official information available, including on the United Kingdom Border Agency
	website, for long- and short-term visitors to the United Kingdom, and in particular artists and entertainers.

Lord Taylor of Holbeach: My Lords, on 21 November Visa4UK, the UK’s online visa application system for overseas customers, was upgraded to make applications easier to complete. The content of the former UKBA’s website will be transferred to gov.uk by the end of March 2014. Those measures will make immediate improvements to the online customer experience for all users, including the artists and entertainers mentioned by the noble Earl in his Question.

The Earl of Clancarty: I thank the Minister for that helpful reply but does he realise that the official artists and entertainers information is out of date and does not include the permitted paid engagements scheme the Government introduced to improve the system? Can something be done more quickly to ensure that those planning to visit this country have access to the most up-to-date information at all times? They cannot wait on UKBA reorganisation.

Lord Taylor of Holbeach: My Lords, this is well recognised by us and we regret that the publication of the revised leaflet, of which the noble Earl will be well aware, has been delayed. We plan to publish the revised leaflet in the next few weeks on the existing website. It will move in due course to gov.uk as part of the wider web content migration. We are grateful for the contribution made by the noble Earl and representatives of the arts sector in developing the leaflet and for their helpful feedback on immigration systems for artists and entertainers.

Lord Clement-Jones: My Lords, is my noble friend the Minister aware of the case of the singer and composer Pamela Z, who came from San Francisco on a PPE visa on the invitation of Sussex University and City University, London? She was held by UKBA at Gatwick for more than three hours and eventually allowed to enter only on the extraordinary condition that she could teach at Sussex but not perform at City University. Can my noble friend clarify whether non-EU performing artists invited on these visas by higher education institutes can both teach and perform? Indeed, perhaps he can tell us how to distinguish between the two on every occasion.

Lord Taylor of Holbeach: My noble friend makes a very good point. In fact, I have had some briefing on this incident and I am grateful that it has been drawn to our attention. We suspect that a deficiency in the guidance of the operation of the rules rather than the rules themselves led to this incident. I do not want to go into a lot of detail about a particular circumstance but my noble friend’s comments have not gone unnoticed.

Baroness Smith of Basildon: My Lords, this is a bit of shambles and it is also becoming highly embarrassing for the UK. Towards the end of last week a London concert by the Pakistani Sachal Jazz Ensemble was cancelled because of visa problems. The residents of New York had enjoyed packed performances
	at the Lincoln Center just the week before but the musicians had problems getting visas to come to the UK. A Home Office statement today says:
	“Britain is open for business and genuine visitors and tourists coming here to enjoy our world class attractions, study or do business are always welcome”.
	It does not appear like that to those artists and performers who are having great problems getting to this country to perform, so our citizens are denied the opportunity to see them whereas American citizens have not been. Can the noble Lord give this urgent attention? I am sorry to say that his answers so far sound slightly complacent.

Lord Taylor of Holbeach: I hope the noble Baroness will never assume that I am complacent about anything. I am well briefed on this subject too and this incident. It is part of our commitment to work with those putting on concerts and international events to ensure that they are aware of the visa application process. However, the responsibility to have the correct visas rests with people coming here and guidance is available on the website to help them before they travel. As with any other visitors to the UK we expect individuals to meet our entry requirements. I can say no more than that.

The Lord Bishop of Truro: My Lords, I do not wish to argue that all clergy are entertainers as that would not be true in my experience. But can the Minister comment on the frustration felt again and again by Christian people—clergy and others, especially from Africa—who are invited by dioceses in this country with expenses guaranteed? They have to travel long distances and are not always able to access websites to apply for a visa and are then faced with delay or refusal based on the assumption that they will not return home to their families and responsibilities.

Lord Taylor of Holbeach: I am sure the right reverend Prelate will be aware of the responsibility on all Border Agency staff to deal judiciously with these matters. However, they can act only on the information that they have when people present themselves for entry. I hope that the new website will make it much easier for everybody to come here. If anybody is organising an event which involves people coming from overseas, they have an opportunity, in a spirit of partnership, to make sure that everybody is aware of the documentation they require. There is no difficulty getting that documentation provided the application is made.

Lord Rowe-Beddoe: My Lords, will the Minister take a look at the Russian situation? Next year—2014—is designated the UK-Russia Year of Culture. At the first meeting of the joint Russian-British committee, we were informed by the Russian ambassador that considerable trouble and expense are involved in getting Russian artists over here to perform. As we are about to embark on a joint year of culture, as I said, perhaps he will be kind enough to look at this.

Lord Taylor of Holbeach: I am very happy to pass that message on within the Home Office. I recognise the importance of Russian art and culture in many art forms, not least music. We have made enormous strides
	in our relationship with China, another country with a large number of potential visitors, and we hope that that will set a useful precedent for arrangements we can make with Russia.

Energy: Prices
	 — 
	Question

Tabled by Lord Kennedy of Southwark
	To ask Her Majesty’s Government what estimate they have made of the impact of recent energy price rises on local authorities in financial years 2015-16 and 2016-17, compared to a price freeze.

Lord McKenzie of Luton: My Lords, on behalf of my noble friend Lord Kennedy of Southwark, and with his consent, I beg leave to ask the Question standing in his name on the Order Paper.

Baroness Verma: My Lords, the Government are helping local authorities with their energy bills. The Salix Finance public sector energy efficiency loan scheme provides interest free loans to public sector organisations, including local authorities in England, Scotland and Wales. Last week we announced an additional £90 million of funding to help improve the energy efficiency of public sector buildings. The Government Procurement Service purchases energy on behalf of many public sector organisations, including local authorities, resulting in lower energy costs for the public sector.

Lord McKenzie of Luton: My Lords, I thank the Minister for that reply. However, we know that local authority budgets are being cut to the bone and many local authorities are already struggling to meet their statutory obligations to vulnerable people. Notwithstanding what the Minister has said, does she agree that, by ruling out price freezes, households are faced with a double challenge of rising energy prices at home and further cuts to vital local authority services on which so many depend?

Baroness Verma: My Lords, although the Government cannot, of course, control wholesale prices, in our announcement last week we put forward a package of measures which should help local authorities and consumers. The noble Lord will be aware that only today the OECD said that if it were to follow the noble Lord’s party’s plans on an energy price freeze, there would be underinvestment as investment would be frightened off coming to the UK. I am sure that is not what the noble Lord or his party want, but, sadly, that is what would happen. The noble Lord will also be aware of the complete drop in share prices across energy companies following the statement made by the leader of his party in September.

Lord Teverson: My Lords, as part of their localism agenda, the Government have removed many restrictions on local authorities, one of which is the ability to generate electricity from their own resources. Will my noble friend the Minister remind us what income this initiative has generated for the benefit of council tax payers?

Baroness Verma: My Lords, my noble friend is absolutely right. This initiative is of great benefit to local communities and allows local authorities to look at how community-based renewable energy schemes can benefit not just local communities but also help local consumers reduce their energy costs.

Baroness Royall of Blaisdon: My Lords, my right honourable friend Ed Miliband is certainly leading the country in many ways and forcing many U-turns on the Government, but it would be extraordinary if the leader of the Opposition were to have such an impact on the share prices of energy companies 18 months away from a general election. That said, I note what the noble Baroness said about new measures which she believes will have a beneficial impact on local authorities. Have calculations been made about the rise in energy prices for hospitals, health centres and health in general in this country?

Baroness Verma: My Lords, the noble Baroness is being incredibly complacent if she thinks that making a statement would not have an impact on share prices across the country. Of course, it undermines investor confidence. We need to make sure that people wishing to invest in the energy infrastructure of this country are confident that we will have a stable set of measurements. That gives confidence to investors rather than deters them from coming here. The noble Baroness asked a number of questions about what we are doing to help. We have done an awful lot to help consumers get through the difficult period. Through ECO we have put in many measures to help 230,000 of our most vulnerable households. There are cold weather payments and there will be warm house discounts to help them see out cold winters. This Government are doing a lot to ensure that those who need help will receive it.

Lord Harris of Haringey: My Lords, is the Minister telling the House that the Government believe that those people with shares in energy companies are right to be confident that Labour will win the next general election? That is the implication of what she is saying. However, I do not expect a detailed answer to that point. Will the Minister say what she thinks will be the impact on police budgets of rising energy costs and whether this will further add to the loss of local neighbourhood policing in various parts of the country?

Baroness Verma: My Lords, on the noble Lord’s first question, no, I do not expect his party to win. In fact, I am trying to point out that he and his party ought to be very careful that we do not undermine this
	country’s great strength in attracting inward investment. Making complacent statements that have no substance puts investors off.

Lord Hamilton of Epsom: Does my noble friend think that I am being too optimistic in believing that my Centrica shares will start going up again as we approach the next election and the chances of the Conservatives winning it will increase?

Baroness Verma: My Lords, as long as we have a Conservative Government in place, I am sure that we will all benefit.

Baroness Royall of Blaisdon: My Lords, the politics are very interesting, but the noble Baroness has been asked two questions—one about the impact of energy price rises on hospitals and the health community in this country and the second about the impact on police forces and policing. If the noble Baroness is not able to reply to these questions today, will she write with the requisite information?

Baroness Verma: My Lords, I do not wish to avoid answering any questions but, given the time, I have to answer as much as I can of the questions that I am given. The Government Procurement Service purchases energy on behalf of many public sector organisations, including, I am sure, the organisations to which the noble Baroness refers. Harnessing that collective purchasing power and buying directly on the wholesale market results in lower energy costs.

Baroness Maddock: My Lords, does my noble friend remember, like me, that the present leader of the Labour Party was once the Secretary of State for Energy? Does she also remember that, far from increasing competition in the market, which is the one way that we will drive down prices, we saw competition decrease on his watch?

Baroness Verma: My noble friend is absolutely right. When the party opposite came to power, there were 14 energy companies. When it left, there were six. I am glad to announce that since then eight independent generators have come on the scene.

European Union (Definition of Treaties) (Colombia and Peru Trade Agreement) Order 2013
	 — 
	Motion to Approve

Moved by Lord Popat
	That the draft Order laid before the House on 21 October be approved.
	Relevant documents: 13th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 2 December.
	Motion agreed.

Infrastructure Planning (Business or Commercial Projects) Regulations 2013
	 — 
	Motion to Approve

Moved by Lord Popat
	That the draft Regulations laid before the House on 31 October be approved.
	Relevant documents:13th Report from the Joint Committee on Statutory Instruments, 18th Report from the Secondary Legislation Scrutiny Committee, considered in Grand Committee on 2 December.
	Motion agreed.

Children and Families Bill
	 — 
	Report (1st Day)

Amendment 1
	 Moved by Lord Nash
	1: Before Clause 1, insert the following new Clause—
	“Contact between prescribed persons and adopted person’s relatives
	(1) In section 98 of the Adoption and Children Act 2002 (pre-commencement adoptions: information), after subsection (1) insert—
	“(1A) Regulations under section 9 may make provision for the purpose of facilitating contact between persons with a prescribed relationship to a person adopted before the appointed day and that person’s relatives.”
	(2) In each of subsections (2) and (3) of that section, for “that purpose” substitute “a purpose within subsection (1) or (1A)”.
	(3) In subsection (7) of that section, after the definition of “appointed day” insert—
	““prescribed” means prescribed by regulations under section9;”.”

Lord Nash: My Lords, I am delighted to be starting the Report stage of the Children and Families Bill. I know that we are all hoping to make significant progress through the Bill this afternoon and evening, but before I speak to my first amendment, I hope noble Lords will allow me to share a few words of thanks.
	We had some very good debates in Committee over 12 days and I am extremely grateful to all noble Lords who contributed to those debates and to those who came to the many meetings we had during Committee and since on specific issues. I found the debates and those meetings extremely helpful, and I have tried hard on those relatively few matters where we do not have a consensus really to understand both sides of the argument. I am grateful for the patience and expertise of all noble Lords who have taken time to talk to me and I have shared those discussions with my right honourable friend the Secretary of State for Education and my honourable friend the Minister for Children and Families—noble Lords will realise, I am sure, that they have been supporting me on a learning curve which has been, at times, almost vertical.
	I am also grateful to noble Lords for tolerating the large volume of paper that I and the Bill team have been sending your way. Some people have been kind enough to say that our meetings and correspondence have been helpful, and I very much hope that has truly been the case. We have now shared improved indicative statutory guidance on adoption, sibling contact for children in care, care leavers’ access to records and support for care leavers aged between 21 and 24 who are not in education, training or employment. We have also shared information on new regulations and guidance on support for trafficked children. Copies of that information are in the Printed Paper Office if noble Lords do not already have them. Some of the guidance addresses issues that we will continue to discuss today; in other areas, I am pleased that we have been able already to make progress towards addressing the issues that your Lordships have raised.
	A number of noble Lords were kind enough to join me in a discussion with our new chief social worker, Isabelle Trowler. Isabelle was inspirational in her account of the reforms she is helping the Government to drive to improve the confidence, professional skills and quality of social workers. Achieving that will do more than any primary or secondary legislation or statutory guidance can do on its own to secure the step change we all want to see in support for our most vulnerable children.
	There are also some issues on which we have been persuaded that legislation is the answer. Noble Lords will see further evidence of this when I table amendments to Part 3 of the Bill later this week. If we proceed at pace tonight, we will be able to speak about the Government’s commitment to use this Bill to legislate on “staying put” arrangements for care leavers in foster care.
	Returning to the matter in hand, however, let me thank my noble friend Lady Hamwee and the noble and learned Baroness, Lady Butler-Sloss, for helping me to understand the initially confusing issue of access to intermediary services for the descendants of adopted people. There was one debate in Committee in which I felt we were operating in two completely parallel universes and there was also a moment in the debate when I felt there was an anomaly which could not possibly be as simple and straightforward as was being proposed. However, on investigation afterwards and following an extremely helpful meeting with my noble friend Lady Hamwee, the noble and learned Baroness, Lady Butler-Sloss, and a number of people who are experts in the field, it became clear that there was an anomaly that we needed to rectify. I am therefore delighted to be putting forward an amendment today that addresses this.
	Under the current law as it applies to adoptions that took place before 30 December 2005, both the adopted person and the adopted person’s birth relatives are able to make use of an intermediary service to facilitate contact between them, but the children of the adopted person are not able to do so. My noble friend Lady Hamwee and the noble and learned Baroness, Lady Butler-Sloss, have set out very clearly that this anomaly leaves a number of people in the dark about their family history. The proposed new clause will correct this anomaly. It will enable regulations to be
	made that will extend access to intermediary services to those who have a prescribed relationship with the adopted person. I should be clear that the reason that the proposed new clause does not apply to adoptions that took place after 30
	December 2005 is because information about these adoptions is held and accessible under a different legal framework, which does not distinguish between descendants and other relatives.
	Noble Lords may wonder why the wording of the new clause refers to “persons with a prescribed relationship” rather than “descendants”. Were we to put “descendants” on the face of the Bill, we believe that the extended access would be limited to children and grandchildren of the adopted person. While it is our intention that the regulations will, at a minimum, include the children and grandchildren of the adopted person, we also wish to consult on whether it is appropriate for others, such as spouses and siblings of the adopted person, to be able to access the same services.
	With the help of my noble friend Lady Hamwee, the Government have explored the implications of this reform with the Law Commission and the British Association for Adoption and Fostering and are confident that this new clause will close the current gap in the law. I hope that your Lordships agree that this amendment is necessary and I urge noble Lords to accept it. I thank again my noble friend Lady Hamwee and the noble and learned Baroness, Lady Butler-Sloss, for bringing this important matter to our attention. I am very glad to be able to rectify the problem. I beg to move.

Baroness Hamwee: My Lords, I start where my noble friend the Minister started by referring to the series of meetings that he and his colleagues arranged as well as the many papers—I cannot remember what term he used, but it was a lot of paper, which was welcome—that we received during the period starting before the end of Committee. I do not think that I have ever known so many meetings as he was able to arrange, but they have been extremely helpful. Because we are on the first day of another stage of the Bill, I need to declare interests as patron of the Intercountry Adoption Centre and of PAC and as a president of London Councils.
	It will not be a surprise that I support and welcome this amendment. I thank the noble and learned Baroness, Lady Butler-Sloss, and the noble Baroness, Lady Howarth of Breckland, for their support in Committee, the officials who struggled with the technicalities of the not-very-easy current provisions and, most of all, the Minister, who dealt with the matter with care and, if I may say so, very effective pragmatism. I know that I pass on the thanks of the British Association for Adoption and Fostering and the Law Commission, both of which were involved, and of the individuals who have campaigned for this change. I have been able to show to the Bill team the very grateful and excited emails that I have had from the lady who has led the campaign. She and those with whom she is in touch can see that they will be able to answer questions about their own heritage, medical issues and indeed their very identity.
	I understand the Government’s caution to ensure that the extent of the new rights is appropriate, and the Minister has given us an assurance as to children and grandchildren being the minimum within the prescribed relationships. I hope that he can assure the House that the consultation on this will take place very soon after Royal Assent and that the necessary regulations are expected to follow very speedily so that the anomaly that has been identified can be corrected with the minimum of delay. I thank him and his colleagues very much indeed.

Baroness Butler-Sloss: My Lords, I declare an interest at the beginning of the Report stage as a governor of Coram and as a patron of, among others, BAAF, PAC and Childhood First.
	I start by saying that I think that this is a good Bill, though it needs some improvements. What is absolutely splendid is that in certain places the Minister has listened with great care and, like the noble Baroness, Lady Hamwee, I am extremely grateful to him, not only for a number of very useful meetings on this particular amendment and indeed others, but also for the outcome. I am really very grateful indeed and look forward to that being a source of relief to a number of families.

Lord Nash: My Lords, I assure my noble friend Lady Hamwee that we will consult on this immediately after Royal Assent. I thank both her and the noble and learned Baroness, Lady Butler-Sloss, for their comments.
	Amendment 1 agreed.
	Clause 2: Repeal of requirement to give due consideration to ethnicity: England
	Amendment 2
	 Moved by Baroness Butler-Sloss
	2: Clause 2, page 2, line 12, at end insert—
	“( ) In subsection (4)(d) (matters to which court or adoption agency must have regard), after “the child’s age, sex, background” insert “and (except in relation to an adoption agency in Wales, to which subsection (5) applies) religious persuasion, racial origin and cultural and linguistic background.”

Baroness Butler-Sloss: My Lords, I said that this was a good Bill; none the less, there are certain aspects of it with which, respectfully, I do not agree.
	This amendment relates to comments at the beginning of the pre-legislative scrutiny report by the Select Committee on Adoption Legislation, which I had the honour of chairing. It was the unanimous view of the members of that committee that, compared with the previous position, the Government had gone too far in the opposite direction. Section 1 of the Adoption and Children Act 2002 lists eight considerations applying to the exercise of powers. The previous Government had included subsection (5) as a separate subsection. It reads:
	“In placing the child for adoption, the adoption agency must give due consideration to the child’s religious persuasion, racial origin and cultural and linguistic background”.
	Instead of being one of a number of considerations, that was out front. The result was that social workers, who were dealing with what is properly called the “ethnicity question” up front, were refusing to place
	children for adoption with parents who were not of the same colour, the same persuasion or whatever, and this was impeding the very natural and highly to be commended desire of this Government for adoption to move speedily.
	The Government therefore decided to take Section 1(5) out of the Adoption and Children Act 2002. So far, so good, but now they have gone too far the other way because it does not appear anywhere. The nearest you get to it is Section 1(4)(d) of the Adoption and Children Act 2002, which reads,
	“the child’s age, sex, background and any of the child’s characteristics which the court or agency considers relevant”.
	The Government’s view is that that covers the ethnicity point but I do not share that view. The evidence that the Select Committee received was that, whereas social workers paid too much attention to that consideration when it appeared as a separate subsection, there was now a very real danger that they would not pay any attention to it at all. Matters which are of considerable importance to a child—their religious persuasion, racial origin and cultural and linguistic background—have to be taken into account. They must not be permitted to frustrate a proper adoption if the circumstances of the adoption come outside one of those matters but they must be included in the checklist of the various points to which the social workers, the adoption agency—but usually the social workers—and the court must have regard, and removing them presents a problem.
	I have had various meetings with the Minister and I even gave him a cup of tea this afternoon before we embarked on what is going to be a very long evening. However, I am afraid that I am not persuaded by his suggestion that there should be statutory guidance. Having it on the face of the legislation means that it has “an importance” but not “the importance”, whereas we all know that, although statutory guidance is important, it may not necessarily be read as carefully as it might be. However, it cannot be entirely ignored if it is in primary legislation. I share the Select Committee’s thought, which was to tuck it in neatly into subsection (4)(d), so you would read it as,
	“the child’s age, sex, background and any of the child’s characteristics which the court or agency considers relevant”.
	This would then include,
	“religious persuasion, racial origin and cultural and linguistic background.”
	It would not be too prominent, but it would be there. For those reasons I wish to pursue this amendment, and I beg to move.

Baroness Hamwee: My Lords, I have the other amendment in this group. Like the other members of the Select Committee, I agreed that certain characteristics of a child for whom adoption was sought should not be highlighted as if they overrode everything else. Like the other members, as the noble and learned Baroness has said, I was concerned that the wrong message might be taken from new legislation. In taking out a provision for due consideration—because that is all it is, not an overriding consideration—to be given to the child’s,
	“religious persuasion, racial origin and cultural and linguistic background”,
	Parliament would be saying that no consideration should be given. Like the noble and learned Baroness, I fear that guidance would not be enough in that situation.
	I do not think we said this in Select Committee, but I am fearful about this. England would not be in the same situation as Wales. Wales will be keeping this wording. The fact that adoption is a devolved matter does not answer the concerns that I have. It would be seen as a very significant distinction. This swinging political pendulum has got to end up in the middle. As the noble and learned Baroness has said, it is not an overriding issue, nor something to be entirely discounted. In Committee I said there had been oversensitivity to what some parts of the media regard as political correctness. I know that the Minister’s concern is that minority-ethnic children are being short-changed. Sadly, the cohort that is being short-changed is the many children from all sorts of backgrounds who are waiting for adoption. The problem is the imbalance between their numbers and the numbers of prospective adopters. To adopt, one needs to be sensitive—to be understanding of the importance of religion, of racial origin, of cultural and linguistic background. It is not a matter of “being the same as”. People who are the same may not understand, and may not be sensitive enough. But that sensitivity, that openness, addressing issues which may arise—that is the matching which is important, not the direct same characteristics.
	As the Government were not been persuaded in Committee, a different approach might appeal. My amendments would take out the references to age and sex so that the court and the agency should have regard to the child’s background and characteristics, because those cover everything. The Minister has said that background and characteristics must include ethnicity. He said that is a matter of plain English. Age and sex are also characteristics, so I hope that my plain English amendment might be helpful.

Baroness Perry of Southwark: My Lords, pendulums do swing; it is very difficult to find a middle way. We are all agreed that it was wrong that for a period of time there was too much emphasis given to a child’s racial and religious background, as the noble and learned Baroness has said. That has resulted in appalling waiting times for children of some ethnic-minority backgrounds, who wait to be adopted for three or four times longer than white children—their contemporaries—do. That is not acceptable in our society. But we are in danger of swinging the pendulum a little bit back in the wrong direction by trying to put in the words of,
	“religious persuasion, racial origin and cultural and linguistic background”.
	I am of the view, which I understand is also the Minister’s view, that any sensible person trying to interpret the “background” would include racial, religious, cultural and linguistic origins. There is no way that you can look at someone’s background without taking those into account, otherwise the word “background” is meaningless. What else could it possibly mean?
	I turn to the amendment of the noble Baroness, Lady Hamwee. I have a lot of sympathy with her wishing to take out the racial, cultural and linguistic
	elements as put forward by the noble and learned Baroness, Lady Butler-Sloss, but I wonder whether we have not taken too much out there. It is a question of the pendulum swinging in all directions. Given all the various views that there are here, it seems to me that we all want the same thing: we want children of ethnic-minority backgrounds to be able to be adopted as quickly as their contemporaries; and we also want all their background to be taken fully into account. Given the efforts we are making to get the pendulum to hang in the middle, I think the Government have got it just about right.

Baroness Walmsley: My Lords, my name is attached to the amendment of the noble Baroness, Lady Hamwee. Our intention in paring this down to background and characteristics is to force people to look at the guidance. The Government tell us that they are strengthening the guidance considerably and will emphasise the need to understand that a child’s ethnicity is an important aspect of their identity. What concerns me particularly about taking ethnicity out altogether is that we will continue to have a large number of trans-racial adoptions. Hurrah to that, I say, as long as the child is going to a family who can love them, bring them up in a caring way and, if there are differences in background, ethnicity, culture and so on, understand how that affects the child. Whether through the Bill or in the guidance, we need to ensure that local authorities, when dealing with prospective parents, are able to investigate whether they are the kind of parents who would understand the importance of that characteristic of the children. I fear that taking “ethnicity” out will not fix the problem.
	As my noble friend Lady Hamwee said, there is a mismatch between the cohort of children waiting for adoption and the size of the cohort of parents prepared to adopt them. There is also a difference in the ethnicity of those two groups and that is why, until we can balance the ethnicity of the one group and the other, there will continue to be those trans-racial adoptions. That is why we need to make quite sure that, among all the other wonderful characteristics of those prepared to take the step and adopt a child who needs a home, there is that sensitivity and understanding of the child’s ethnic background. Whichever way we do it, it has got to be done well.

Baroness Whitaker: My Lords, following the intervention of the noble Baroness, Lady Walmsley, with which I agree absolutely, I warmly support the amendment in the names of the noble and learned Baroness, Lady Butler-Sloss, and my noble friends on the Front Bench.
	The noble and learned Baroness, Lady Butler-Sloss, has unrivalled expertise. I have only personal experience—I am speaking as the parent of an adoptive child of Asian background—and it is my conviction that any child of a different racial background from the parents is deprived if it cannot identify easily, almost unconsciously, with someone close to it in the way children do. A baby first learns visually to recognise faces. A teenager depends very much on confirmation of his or her identity to develop confidence. A loving
	home is, of course, all important. I am speaking not only as a parent, but as a member of a support group for adoptive parents, so I am also aware of their experiences. You impose a burden and a cause of stress on a child if ethnicity—as far as is possible—is not respected.
	Children survive all sorts of things and I hope we have had a happy family. But that in no way alters my conviction that the Government should pay attention to this need of children and accept this amendment.

Baroness Eaton: My Lords, some interesting points have been made by the previous speakers, but one of the things none of us has mentioned so far is the valuable and important role of social workers in this exercise of matching children with appropriate, loving parents.
	I worry that by being as prescriptive as putting something like this on the face of the Bill or making guidance hugely prescriptive, we are limiting the opportunities of social workers to be flexible and professional about their assessment. If we need to do anything, perhaps it is strengthening that kind of perception and understanding within social worker training. I have confidence that, if the Government choose to remove this, it does not mean that social workers will not look at each child’s background very fully; and not just the backgrounds of children who are easily identified as from a minority. The assumption that all Caucasian children, for instance, have no difference in their needs is quite ridiculous.
	If we are prescriptive about applying considerations to do with parental connections only to the lives of children from ethnic minorities, we are not giving social workers the right to make the proper professional judgments. For example, if a Quaker family adopts a child from a Catholic background, it is just as important for them as it is for people of mixed ethnicity. I am concerned that if we are prescriptive and put something on the face of the Bill and are also prescriptive in the statutory guidance, we may make the situation worse in some cases.

Baroness Lister of Burtersett: My Lords, in Committee I spoke in support of Amendment 2. I quoted the Joint Committee on Human Rights, of which I am a member, in its legislative scrutiny report. This led to some debate about the implications of the UN Convention on the Rights of the Child for this clause.
	I want to read from the letter that the chair of the Joint Committee on Human Rights wrote to the Minister following our debate in Committee. He expresses disappointment at the Government’s refusal to accept the amendment. He writes: “In your response”—to the noble and learned Baroness, Lady Butler-Sloss—
	“you said that ‘the UN Convention on the Rights of the Child does not require children to be placed with someone who shares exactly the same ethnicity but someone who respects it.’ That is correct, but what the UN Convention on the Rights of the Child does expressly require, in Article 20(3), is that ‘when considering solutions, due regard shall be paid … to the child’s ethnic, religious, cultural and linguistic background’. Removing the statutory provision which gives effect to that obligation, without retaining those considerations in the welfare checklist, is incompatible with that provision of the Convention.
	Unless the Government accepts the amendment when it is brought back at Report stage, it seems to us to be inevitable that this aspect of the Bill will be the subject of criticism by the UN Committee on the Rights of the Child. The Government is currently finalising its Report to the UN Committee on the Rights of the Child, for submission in January 2014. My Committee will ensure that the issue is brought to the attention of the Committee when it examines the UK’s Report”.
	Would it not make sense to listen to experts such as the noble and learned Baroness, Lady Butler-Sloss, and the NSPCC? It has said that the amendment would,
	“ensure that reference to ethnicity in the Adoption and Children Act is better balanced rather than it being given prominence in its current standalone form, and that it is appropriately recognised given its significance. We welcome the updating of statutory guidance … and are keen to work with DfE to input into this. However, while the detail of the guidance is certainly important it will only go so far in ensuring this is appropriately taken into account and could send a contradictory message as to its importance having removed this from primary legislation”.
	That is one of the concerns—that having expressly taken this out of the legislation, and if nothing is put back, it will send out a message that whatever the statutory guidance says, this is not important. But it is important, and I really hope the Minister will think again. I know that his reading of the UN convention is different, but the Joint Committee on Human Rights is expressly given the duty to advise Parliament on the human rights implications of legislation. I hope the Minister will take seriously this rather strong advice given by the Joint Committee.

Baroness Meacher: My Lords, I was not planning to speak in this debate at all but I feel strongly that we need to support my noble and learned friend Lady Butler-Sloss. I want to mention only one case—that of a really superb set of parents who adopted two children across the racial barrier; that is, two African children. You could not find better parents. They were both involved in the mental health services and were devoted to these two girls. It seemed that the thing was perfect. But both those girls committed suicide in their late teens. If we are to neglect the advice of the UN convention, we need to beware. It is no accident that these issues are emphasised so clearly, and no accident that our extremely experienced noble and learned friend, Lady Butler-Sloss, has tabled this amendment. We should support it.

Baroness Young of Hornsey: My Lords, I support my noble and learned friend Lady Butler-Sloss on this amendment, as I did in Grand Committee. I do not want to repeat what other noble Lords have said, but I support very much what the noble Baroness, Lady Lister, and my noble friend Lady Meacher said. The noble Baroness, Lady Eaton, said that she thought it would be restrictive to put these words back into the Bill. However, to urge people to have regard is perhaps not as restrictive as she thinks. The agencies from which I have received briefings and with which I have had round-table discussions, along with other discussions over a long period, also support the amendment tabled by my noble and learned friend.
	That is not to say that everybody has a kind of purist, essentialist view on who should be adopting who, but to recognise that there are many other factors
	regarding black and mixed-race heritage children, and children with disabilities. Children with those kinds of backgrounds have experienced delays in the system for all kinds of reasons, not simply because of previous legislation. There are lots of different ways of supporting those children, too, which can be long-term. Fostering can provide long-term stability in lots of different ways. So, as I say, I support my noble and learned friend.

Baroness Morris of Yardley: My Lords, I support Amendment 2 and should like to comment briefly. What is strange is that it seems we are all in agreement. On the substance of the matter, there is not as much disagreement in this debate as I thought there would be when the Bill was published, which is interesting. To some extent, what we seem to be debating this evening is: what is the best way in legislation to give that message to people whose lives will be affected by what we decide?
	I want to add two points to that. The first is about perception. Throughout the implementation of this Bill, one problem will be not so much with the legislation but with how it is seen out there by people who have to interpret it. This is about changing culture. As far as this matter is concerned, the perception of people outside this Chamber is not that there is wide agreement across the political spectrum about the need to take these matters into account, but that this legislation intends to move the position to the other end from where it has been in the past. For me, the challenge is: how do we have something in law that clearly gives the message that it is all right to take into account a child’s ethnic background? Many people out there think that what this legislation is about is that it is not all right to consider a child’s ethnic and cultural background when making a decision on adoption.
	I ask myself which of the two alternatives available to us—statutory guidance or something in primary legislation—will most strongly give the message about where this House wants to have the legislation. It has to be in the Bill; that is my non-expert interpretation. It would be unwise not to take the advice of the noble and learned Baroness, Lady Butler-Sloss, who is paramount in her expertise in this area. If I have to come down on one side or the other, I will go for that of the noble and learned Baroness, not the Minister. In the run-up to the Bill, the spin that the Government gave was that they were moving away from taking into account a child’s ethnic, cultural and linguistic background. That is where people in the wider world think they are. To get the pendulum back to the middle, we clearly need something in the Bill, and so far I have heard nothing that argues against that. To give that message and to get this new legislation to have a fair and good start is better served by putting it in the Bill. I support Amendment 2.

Lord Storey: My Lords, I rise to speak with no real expertise on this matter, although, as it happens, my father was an adopted child. It is interesting that there has been a 20% increase in the number of looked-after children since 2009. I suspect that there is a
	perception that if you do not ethnically match, children will be hanging around waiting for a loving, caring family. I am not sure that that is the case. We all want the same thing, do we not? We all want to make sure that children are adopted by the right families, in all sorts of ways. I rarely disagree with my noble friend Lady Eaton, but if there is statutory guidance—and there will be—it is hugely important that the religious, heritage, cultural and ethnic issues are clearly spelt out. Presumably it is called “statutory” because it is backed by the full weight of the law. When the Minister replies, I hope that he will spell out how important that statutory guidance is.
	I suspect that, for all sorts of reasons, we are at a bit of an impasse because of views shared by other people who are not in this Chamber. I understand that. Clearly, however, there has been real movement by the Government to have statutory guidance. I do not think that I would ever dare to disagree with the noble and learned Baroness, Lady Butler-Sloss. However, I think that social workers do take note, and will have to take note, of that statutory guidance, given that it is enshrined in law. They will know clearly what the thinking is. When the statutory guidance is put together, organisations such as the NSPCC will play a prominent part in making sure that it is fit for purpose and delivers what we all want.

Lord Elton: My Lords, I learnt one lesson at the Home Office where I legislated for some years. When you make a list, the longer it is the more that considerations which are not on the list are excluded. Expressio unius est exclusio alterius: if you have a list of what must be done, the inference is that the rest does not have to be done. Therefore, if you are going to have a list, let it be complete.

Baroness Benjamin: My Lords, first, I thank the Minister for listening to concerns raised in Grand Committee and for the many meetings with all interested parties over the past few weeks to find ways to move forward in dealing with adoption issues.
	With regard to Clause 2, I acknowledge the Government’s argument for removing the requirement in primary legislation to have particular regard to,
	“religious persuasion, racial origin and cultural and linguistic background”,
	as it has become evident that in some cases the current legislation of due consideration has been interpreted too bluntly, with some social workers giving undue regard to racial characteristics and seeking perfect ethnic matches. There is a need to find ways to avoid that happening—to find a balance. Statutory guidance could be the answer if it is fully thought through and applied. However, as we have already heard, there are concerns that the removal of the express requirement to give,
	“due consideration to the child’s religious persuasion, racial origin and cultural and linguistic background”,
	when matching a child with prospective adopters might increase the risk that a child’s racial origin will be completely ignored in matching decisions.
	I would appreciate it if the Minister could tell the House what the Government propose should happen when a child is adopted by a family of different race,
	heritage or religion. How will the guidance ensure that those families are given help to understand, appreciate and engage with the background and culture of the children placed with them? How will the statutory guidance address identity, background and heritage issues that will almost certainly need to be dealt with at different times in a child’s life as, getting older, they grapple to understand their identity? As we have heard, some find it very difficult if they are not exposed to those issues. In short, how will adopters of a different background and ethnicity access additional training and support to help them understand issues their child might have to face, such as racism and identity crisis as well as religious and cultural differences?
	I have spoken to both the NSPCC and CCS Adoption based in Bristol. I declare an interest as I am a patron of the latter. Both believe that a stronger case needs to be made before the removal of due consideration of race and ethnicity when a child is adopted. Some people have asked why we cannot simply amend the welfare checklist specifically to include ethnicity. Can the Minister explain the Government’s reasoning behind the decision not to do this?
	One of CCS Adoption’s concerns is that guidance might be considered discretionary and is more likely not to be adhered to or might even be ignored. Just last week it was advised by its local authority that it was not the authority’s policy to undertake life story work with children or to produce a life story book for a child. In the local authority’s view, these tasks should be done by the adopters. Would statutory guidance make this clearly the responsibility of the local authority, as it holds the child’s key information? The life story workbook is key to any child coming through the care system in helping to preserve and develop their identity. To try to delegate these responsibilities to adopters when all the key information is held by the local authority is unacceptable as it does not ensure that the best interests of a child are met. Will this practice be addressed and enshrined in statutory guidance?
	As we have heard, the NSPCC welcomes the updating of statutory guidance in relation to this issue and is keen to work with the department to input into this. However, it feels that this is work in progress and that at this stage it cannot commit wholeheartedly to endorsing the guidance. It and others have asked a number of questions to seek reassurance. What impact will the statutory guidance have and how will it be implemented? Aside from whether the guidance is statutory, as the Government are proposing to remove “due consideration” from primary legislation, do they think that stating this in guidance is contradictory and could lead to confusion among social workers as to whether it is a priority issue for consideration? How will the guidance ensure that all families are given help to understand, appreciate and engage with the background and culture of children placed with them? How will the Government ensure that local authorities actively recruit more adoptive parents from a range of ethnic backgrounds?
	I believe that when a child is adopted by a family of different race, heritage or religion, that family must fully understand the child’s background and help the child to cherish their birth heritage. Adopters do not have to share the same ethnicity, but they must be able to respect the child’s background. They must be able
	to help the child to identify with their birth heritage and to be well prepared for issues that may arise as the child develops into a teenager and beyond. These adopters therefore need to be supported and helped by appropriate training to strengthen their skills together with their knowledge and understanding of the child's birth heritage, so that they can meet these needs.
	This will undoubtedly avoid situations like the one I was made aware of recently by a young mixed race girl. She wrote:
	“Growing up in a completely white family meant I didn’t get a taste of my heritage and not knowing my father meant that I wasn’t introduced to my black heritage until my teens. I feel strongly about this topic as I used to be picked on when I was younger and called an ‘Oreo’ (black on the outside, white on the inside) purely because I didn’t know or understand my black heritage”.
	Over the years I have heard many similar stories.
	Every child needs a loving and stable home, but they also need to be confident about their identity in order to face the world. We all agree that children must not suffer as a consequence of our decisions. So if we end up with statutory guidance, we must all work diligently to ensure that it is clear and understandable to all and not open to misinterpretation. As I always say, childhood lasts a lifetime and a child’s experiences shape their adulthood. So let us get this one right. I am happy to work with the Minister to do just that. In the mean time, I look forward to hearing how the Minister believes the Government can achieve this.

Viscount Eccles: My Lords, these are complicated matters. We need to come down on one side of the fence. Can primary legislation cope with these matters, or are there so many variables that we have to rely on guidance? Guidance would allow more judgment than could be exercised if faced with a section in an Act of Parliament. My perception is that we would be better advised to rely on statutory guidance. If we do not like it or do not think it deals adequately with all the variations that have been talked about today, we can debate it in Parliament and ask the Government to think again. However, trying to cover what has been talked about today in a clause in a Bill which becomes an Act of Parliament will not work. Therefore we have to rely to a much greater extent on the development of confidence and judgment within the system operated by the courts, local authorities, social services and voluntary agencies. That is the way we should go.

Baroness Jones of Whitchurch: My Lords, I speak in favour of Amendment 2, to which my name has been added, and very much support the arguments that the noble and learned Baroness, Lady Butler-Sloss, has put forward this afternoon.
	Noble Lords who were in Committee will recall that we debated this in depth. It is fair to say that there was widespread sympathy for the point of view that the noble and learned Baroness has put forward this afternoon. There was a sense that we wanted to get the balance right—not overstating their importance, but recognising that ethnicity, culture, language and heritage
	are all factors that make up a child’s identity, which any prospective adopter should be able to respect and value. The challenge for us is how to get it right and achieve that.
	The noble and learned Baroness, Lady Butler-Sloss, explained that this issue was dealt with in some detail by the adoption pre-legislative scrutiny committee last year, which took evidence from a number of the major players in the adoption sector, including Coram and Barnardo’s. We continue to believe that that is an authoritative piece of work. While no one wants children to be disadvantaged by delays being caused by the search for the perfect match, the evidence of the adoption committee seemed to show that while there are some pockets of poor practice, it is no longer a widespread issue. For example, Barnardo’s believed that the current legislation was adequate and Coram argued that while this might have been a problem in the past, the situation was improving rapidly. The committee also identified that there were several other factors affecting the placement of BME children, including having fewer prospective adopters and a failure by social workers to promote their availability. The truth is that there remains a paucity of evidence that BME children are waiting longer for placements because of the current wording on ethnicity.
	In his response in Committee, the Minister referred to two pieces of research, which I have now had a chance to look at. The first is by Julie Selwyn and commenced in 2005, which is some time ago. Even so, the study did not find systematic bias or mishandling of minority ethnic children by children’s services. The second piece of research, which was by Professor Elaine Farmer, was also carried out some time ago. It commenced in 2007. It was also interesting reading, but it covered a limited sample and, as she acknowledged, it was impossible to draw definitive findings because local authority practice was changing at the very time that the research was taking place. I believe that the latest research carried out by the adoption Select Committee is probably a better reflection of what is currently happening in adoption practice rather than research carried out six or seven years ago.
	While there is, no doubt, scope for further definitive research, we should in the mean time be cautious about driving major change in this area. This is why we believe that putting these factors in the welfare checklist along with other considerations strikes the right and proportionate balance in addressing this issue. It would require agencies to have regard to these factors, but they would not be paramount.
	The Minister argued that, if references to ethnicity and culture were removed, they would nevertheless remain as a silent, unspoken part of the children’s characteristics and would still need to be taken into account. A similar argument was put forward by the noble Baroness, Lady Hamwee, in her amendment. The Minister also referred to the fact that indicative statutory guidance is being prepared, which we welcome. But putting those two things together, I do not think they are good enough. By removing the references to ethnicity, religion, culture and language from the Bill, the Government plan to send a deliberate message to courts and social workers. Why else would they do it?
	We believe that that message is disproportionate and misguided and will be interpreted in the wrong way.
	As we discussed in Committee, any change in the law in this area would also be in direct contradiction to the UN Convention on the Rights of the Child, and in particular Article 20, which states:
	“Children who cannot be looked after by their own family have a right to special care and must be looked after properly by people who respect their ethnic group, religion, culture and language”.
	I am very grateful to my noble friend Lady Lister for updating us on the continued concerns of the Joint Committee on Human Rights in this regard. We continue to share those concerns. We think it is important that parents understand the identity of the child and are able to help them feel at ease with that identity. We cannot be blind or neutral to these considerations.
	For all these reasons, we urge the Government, even at this stage, to agree to the amendment. We all want what is in the best interests of the child, which in this case is to have their identity respected and nurtured. We believe that our amendment sends the right message to the sector, building on their developing good practice and helping to speed up placements. I therefore urge noble Lords to support the amendment.

Lord Nash: My Lords, it seems ironic that, on a day when we have been paying tribute to probably the greatest force for racial reconciliation ever, we are having a debate about a matter relating to race. However, I am encouraged by today’s debate. It is absolutely clear that we are really not very far apart; we are all trying to achieve the same thing—the question is just how. Perhaps I could try and outline, at some length if I may, how I and the Government see the matter, our motivation, and where I believe there is considerable common ground.
	The fact is that it takes two years and seven months for a child from entering the care system to be formally adopted, but for a black child it is 13 months longer—nearly four years. It takes one year and seven months for a child to be placed with his or her proposed adopters, but for a black child it takes 13 months, or 70%, longer. Of course, this conceals the fact that many children never get adopted. This is completely unacceptable and upsets me now as much as it did when I first heard about it three and a half years ago. This is not a question of the pendulum having swung too far. The pendulum has swung off the scale.
	I have since I started working with children and young people felt very strongly that we need to ensure not just that the life chances of all young children are substantially improved but particularly those of the BME community, and in particular the black community, because it seems to me that we need more successful black people and more successful black role models. It defines our society to have a balance of successful people. I look forward greatly to the day when there are many more Baroness Youngs and Baroness Benjamins. Although I was scribbling some of the time, I think I agreed with everything the noble Baroness, Lady Benjamin, had to say.
	There is unequivocal evidence on the negative impact of delay on children’s development and well-being. Children need to form secure and stable attachments,
	with one or two main carers in order to develop physically, emotionally and intellectually. Therefore, what can we do about the appalling fact that it takes black children, and other children from other minority ethnic groups, so long to be adopted? First, we are taking great steps on a number of fronts to improve the speed at which children are adopted generally. Secondly, we must seek to recruit more adopters and BME adopters and, as my noble friend Lady Hamwee said, we need to open up the system on a more national basis so that there is more scope for making the right matches. However, our research still reveals that in too many cases social workers try for too long to make a perfect match.
	I have reflected deeply on this clause since Grand Committee. When children are being matched, consideration of their background and heritage plays a critical part. It is an integral part of a child’s identity and their new parents must be able to support them as they grow up. In Committee, there were moving testimonies from my noble friend Lady Perry, who spoke about Marrianna, the little girl of the Kindertransport, for whom her parents cared, ensuring that they learned about Jewish religious tradition so they could help Marrianna cherish her religious identity.
	My noble friend Lady Walmsley spoke about her granddaughter Cathryn, of Chinese heritage, whose parents are learning about her heritage so they can support her. Clearly, with the right awareness and commitment, mixed-race adoptive families can be very happy and successful ones. What is crucial to making effective matching happen is good social work practice and support for adoptive parents so they can support their children, not just at the point of adoption but beyond, as the child grows into a young adult. I do not think that the blunt wording of the Adoption and Children Act—however well-intentioned and wherever it is placed—can secure that.
	I am delighted to see the noble Baroness, Lady King, here this afternoon. I had the great pleasure of meeting her now probably eight week-old son the other day, and one could not wish to see a more charming baby. Perhaps the whole House can join me in congratulating her on the birth of Tullio.

Noble Lords: Hear, hear.

Lord Nash: Under the Government’s proposal, courts and adoption agencies will continue to have to have regard to,
	“the child’s age, sex, background and any of the child’s characteristics which the court or agency considers relevant”,
	as set out in the welfare checklist. The Government take a strong view that that must include the child’s ethnicity. We therefore believe that the amendment is not necessary, as that aspect of a child’s identity will form part of an agency’s, or court’s, considerations in deciding the most appropriate match for a child. It is not in the nature of social workers to ignore ethnicity. That has been confirmed by discussions I have had with practitioners, to which I will refer shortly.
	On the point made by the noble Baroness, Lady Lister, on the JCHR, we do not agree with the Joint Committee that the clause is incompatible with the United Nations convention. We are satisfied that the requirement in the welfare checklist to have regard to
	the child’s background and characteristics includes ethnic, religious, cultural and linguistic background. There is also a risk that to place the requirement in the welfare checklist as the amendment proposes will have the effect of giving this aspect of a child’s identity more significance than other equally important characteristics such as disability.
	Due to the current wording, some local authorities have paid undue rather than due regard to ethnicity in some cases, at the expense of other needs of the child, as most noble Lords have acknowledged. Since Committee, I have spoken with several directors of children’s services about our proposals. I will share with noble Lords what those who are willing to be quoted told me, and why they support our clause. Ade Adetosoye is Director of Community and Children’s Services, City of London, and spent seven years as the director of social care at Lambeth Council, during which time his leadership helped transform practice. He told me:
	“Changing the legislation to remove this explicit requirement is a positive thing—it will not change the good work of many local authorities who already look for the best placements rather than the perfect match. However, poorer performing local authorities do sometimes look too hard for the perfect match to the detriment of the child”.
	Andrew Christie, Executive Director of Children’s Services for Westminster, Hammersmith and Fulham, and Kensington and Chelsea, said:
	“I fully support the government’s plans not to have ethnicity on the face of the Bill and the welfare checklist because there is evidence that suggests that this leads to some social workers trying too hard to make the perfect match which can result in the child taking a very long time to be adopted, or in some cases never being adopted at all. In my authorities we have a strong focus on people realising that the crucial thing for the child is that the clock is ticking”.
	Tim Coulson, Director for Commissioning: Education and Lifelong Learning, Essex, who has himself adopted a child of a different race, said:
	“We agree with the Government’s proposal to remove the requirement in legislation to give due consideration to ‘a child’s religious persuasion, racial origin, and cultural and linguistic background’ because we think that this requirement makes some social workers look too long for an ideal match based on these factors”.
	Those are practitioners at the coal face.
	I think we all agree that we therefore need to change the behaviour and culture of some social workers. We think that the right way to do this is through considerably enhanced guidance, so we have been spending a great deal of time talking to the NSPCC and others about this. I have also had the opportunity to talk to the marvellous charity Hope and Homes for Children, which specialises in going into conflict-torn areas—it started in Bosnia—and placing children in adoptive-type arrangements. It has considerable experience of making cross-race placements, including of Roma children—there is a massive shortage of Roma adopters—and emphasised strongly to me in some detail the importance of training and advice for adopters in that situation.
	The debates with noble Lords have made us look closely at the guidance on this issue. We need to underpin practice with nuanced statutory guidance and will continue to work with the NSPCC and others. We intend that the revised statutory—not discretionary—guidance on which we will consult in the new year, and
	on which I would welcome noble Lords’ comments, will build on the existing draft. It will add that identity, background and heritage are issues that may need to be addressed at different times in a child’s life so that they understand their identity within the family and wider society, particularly as the child reaches adulthood. The noble Baroness, Lady Whitaker, spoke convincingly and passionately from personal experience about the importance of this.

Baroness Whitaker: I am grateful to the Minister for understanding my convictions, but I was attempting to argue against his proposal that these characteristics should not appear in the Bill. It seems to me imperative that they are there as a signpost. I hope he can acknowledge that.

Lord Nash: I am grateful. I understand entirely the noble Baroness’s position. The guidance will also state that adopters of a different background/ethnicity may need additional training and support to help them support their child. This will include how to identify and deal with racism. On the matching process, it will ensure that the adopters can engage with the cultural background, heritage and ethnicity of the child. We will take my noble friend Lady Benjamin’s point about the importance of the child’s life story—the life book—and ensure that this point is in the statutory guidance. I am grateful to my noble friend Lord Eccles for his support for this approach.
	We do not think that having ethnicity in guidance but not in legislation is confusing and we are funding the British Association for Adoption and Fostering to provide training seminars for all local authorities and voluntary adoption agencies on this matter and the rest of the adoption reform programme. Training to support ethnicity issues will be part of the 2014-15 sessions and places at these sessions are free. Of course, good matching is important for all children and all adoptive families need access to adoption support at different stages of childhood. We are addressing these issues for all adoptive families and the guidance will reflect that. We will also add other issues that may arise in our discussions with the NSPCC and other experts. During the consultation I will put a copy of the consultation document in the House Library and send a copy to former members of the Select Committee. I hope that many of you will respond. To make that as easy as possible we would be delighted to host a round-table discussion with Peers about the guidance.
	However, improving outcomes for black children is not only about adoption. For many, fostering will be more appropriate: three-quarters of all looked-after children are in foster care. For others, it will be special guardianship with a relative or former foster carer. Where adoption is the right outcome for black children, we must do better to find them families as quickly as we do for other children. For those children for whom adoption is the right permanent outcome we need action on several fronts. This includes recruiting more adopters generally, including from minority ethnic communities. This year we have given £150 million to local authorities through the adoption reform grant to
	help boost adopter recruitment and £16 million for the voluntary adoption agencies to help recruit more adopters who can meet the needs of children needing adoption. For example, Southwark has come up with innovative ways of recruiting adopters from the black community.
	There will be better training for professionals. We have appointed BAAF to provide training on a range of issues, which next year will include ethnicity. Places are free for all local authority and voluntary adoption agencies. There will be better adoption support. We know how important this is, not only when the child is first placed with the family, but also later on, perhaps when they are dealing with the trials of adolescence and maybe, as my noble friend Lady Benjamin alluded to in one particularly moving case, questioning their identity. In September 2013 we announced a new fund with a contribution of nearly £20 million to help adoptive parents access the best possible support to meet their children’s needs. This fund will be rolled out nationally from 2015 but will be trialled from next year. The investment will make a difference to adopters in providing the support they need and better guidance, and I have explained the steps we are taking here.
	As the noble Baroness, Lady Morris, said so incisively, we have, I believe, complete consensus right up to, and including, the point of diagnosing the problem. The issue is precisely how we change a culture of behaviour, but we have no intention of moving away from the importance of the child’s cultural and ethnic background. It is imperative that these are taken into account on every front.
	I hope that we do not vote on this matter. That would be unfortunate given the nature of the matter that we are dealing with. I am personally committed to spending as much time as possible with my officials, the NSPCC, noble Lords and other interested parties to ensure that we get appropriate guidance in place to enable this matter to be handled in a way that takes into account the best interests of the children so that, on the one hand, their ethnicity is fully taken into account in all placing and matching decisions and, on the other, they are not left on the shelf and short-changed by the system, as many are now.
	I hope noble Lords will agree that we are all very much in the same place and that statutory guidance gives us the scope to steer social work practice in a more nuanced way than through blunt statements in the Bill. On that basis, I hope the noble and learned Baroness will withdraw the amendment.
	I now turn to the amendment in the names of my noble friends Lady Hamwee and Lady Walmsley. I am grateful to my noble friends for their innovative thinking on this matter, proposing to remove references to age and sex from Section 1(4)(d) of the relevant Act. I understand the thinking behind the amendment, which I believe is designed to remove from legislation any of the specific characteristics about a child, and rely wholly on the phrase,
	“the child’s background and any of the child’s characteristics which the court or agency considers relevant”.
	After careful reflection, I do not propose to follow this line of thinking at present. This is because there is no evidence that there is an issue with the way that the courts or adoption agencies are interpreting the words
	“age and sex”. There is a fairly technical issue at play here. Clause 2 seeks to remove subsection (5) of Section 1 of the 2002 Act. This is a requirement which applies only to adoption agencies—that is, local authorities and voluntary adoption agencies—when placing a child for adoption. Subsection (4) of Section 1—what is known as “the welfare checklist”—applies to the court as well as to adoption agencies, so seeking to amend this suggests a change for the courts as well as for adoption agencies.
	In addition, this provision in the welfare checklist reflects an identical requirement on the courts in Section 1 of the Children Act 1989 when considering orders under that Act. Therefore, if we were to change the wording in the Adoption and Children Act 2002 in the way suggested by removing the reference to age and sex, that would send a strange signal to the court as it would suggest a different decision-making process under the Adoption and Children Act 2002 from that under the Children Act 1989.
	However, in the end I come back to the very serious issue we want to address: the delay that black children and other ethnic minority children experience while waiting for adoption. As I said at the beginning, we have today paid tribute to one of the greatest advocates of racial equality ever. I listen frequently to the wonderful speech given by the other great advocate, Martin Luther King, which in my view is the greatest speech ever made. It is not the “I Have a Dream” speech, which everyone thinks of, but the one he made two months before that at Cobo Hall in Detroit in June 1963, which was then the centre of popular music, in which he used that wonderful musical analogy that all God’s children, from base black to treble white, are equally important in God’s world and on God’s keyboard. However, that does not seem to be the result in terms of the outcomes for black children in our adoption system, and this Government are determined to change that.
	It is the requirement on local authorities and other adoption agencies at Section 1(5) in the Adoption and Children Act which—albeit it was placed there with the best of motives—I believe has contributed to the delays that black children face, as I think all noble Lords have acknowledged. The statutory guidance gives us the opportunity to provide much more nuanced advice and guidelines which will benefit all children being adopted, not just those who are visibly different from prospective families. For this reason, I urge the noble and learned Baroness to withdraw the amendment.

Baroness Butler-Sloss: My Lords, I thank all those who have spoken on what in my view is an important issue, although it may be, as several have said, a question of balance and degree. I will start by answering some of the Minister’s points. As a former judge who tried adoption cases, I am well aware of the unacceptable delays that there have been in adoptions of non-white children and children from other cultural backgrounds. I believe that Section 1(5), requiring social workers and the courts to pay particular regard to ethnicity, was wrong and I am happy that the Government wish to remove Section 1(5) from the Adoption and Children
	Act 2002. However, I do not believe that putting these words into the checklist would have the effect that the Minister says.
	The Government are putting forward a number of extremely sensible suggestions, many of them coming from the important reports that have been published. I hope that these will lead to far better adoption situations, and for all children who should be adopted to be adopted more quickly. Therefore, I very much appreciate the work the Government are doing. It is interesting that agencies remain unconvinced by the Government’s arguments, although they are, like the NSPCC, willing to work with Government to improve the statutory guidance if this amendment does not go through. I very much support any sort of enhanced guidance and training, but I am afraid that this is not enough.
	I was probably wrong in my opening remarks to your Lordships in concentrating on ethnicity, because the words that I proposed should go into the checklist are four factors:
	“religious persuasion, racial origin and cultural and linguistic background”.
	They are all equally important and I was at fault for concentrating on ethnicity. It was a shorthand version and probably misleading.
	I take the point made by the noble Lord, Lord Storey, about statutory guidance being good enough, but I ask him: if statutory guidance is good enough, why do we have the checklist? Surely the checklist could equally well go into statutory guidance. The checklist in Section 1(4) of the Adoption and Children Act has six paragraphs, (a) to (e), and three sub-paragraphs, (i) to (iii), and it is thought necessary to include them in the checklist, not just in statutory guidance. So why are the other factors in the 2002 Act so much more important than these four points that I have just set out, which I propose should be slipped neatly in with the rest of the checklist?
	It has been suggested by the noble Baroness, Lady Eaton, that the words “have regard” might be seen as prescriptive, but sitting as I did as a judge, to “have regard” to something is not in the least prescriptive. One can have regard to it and then disregard it. One does not have to keep on regarding it. I certainly had no problem in the Children Act and the Adoption Act in having regard to something, then discarding it. There is nothing at all prescriptive about “having regard”. However, a checklist is a reminder to social workers and judges that they must not ignore it. To take it out altogether, which the adoption agencies are concerned about, is to swing that pendulum too far the other way, because it is not then anywhere.
	It is suggested that the words “background” and “characteristics” are clear, as the noble Baroness, Lady Perry, said, and one does not need anything else. If I may respectfully disagree with her, I actually think that you do. You need a bit of a jolt. What do “background” and “characteristics” mean? They have to include certain points that I am not certain every social worker, however senior, might necessarily have in mind unless they were there. I say again that statutory guidance is not quite as good as having a checklist in primary legislation. The pendulum should be in the middle, and the middle means putting it in somewhere,
	but not making it too important. That is what I would like to see with this amendment, and I would like to test the opinion of the House.

Division on Amendment 2
	Contents 216; Not-Contents 233.
	Amendment 2 disagreed.

Amendment 3 not moved.
	Clause 3: Recruitment, assessment and approval of prospective adopters
	Amendment 4
	 Moved by Baroness Hughes of Stretford
	4*: Clause 3, page 2, line 32, at end insert—
	“( ) When it relates to a direction given under subsection (3)(b) or (c), the power to make a direction under subsection (1) will be exercisable by statutory instrument not to be made unless a draft of the instrument has been laid before, and approved by resolution of, each House of Parliament.”

Baroness Hughes of Stretford: My Lords, I would like to speak to Amendments 4 and 5, which variously attempt to circumscribe the power that the Secretary of State is taking in Clause 3.
	Clause 3 grants the Secretary of State a new power to force local authorities to franchise out adopter recruitment services, either to another local authority or to a registered adoption agency, by amending Chapter 2 of Part 1 of the Adoption and Children Act 2002. The new section inserted by Clause 3 provides the Secretary of State with the power to direct the outsourcing of local authority adopter recruitment functions, either from individual named authorities under subsection (3)(a) or from classes or groups of local authorities under subsection (3)(b) or from all local authorities at once under subsection (3)(c). The important aspect is not the power to outsource itself but the manner in which it would allow the Secretary of State to make change on a large or even national scale at once through a direction. The Secretary of State, in issuing a direction as opposed to bringing forward primary or secondary legislation, would not obviously have to subject himself to any parliamentary scrutiny, and Members in either House would not have the opportunity to question or amend the changes. This is the nub of our concern.
	Our Amendment 5 would have the effect of deleting subsections (3)(b) and (3)(c) and therefore remove the power of the Secretary of State to direct outsourcing from classes or groups of local authorities or from all local authorities at once. We tabled this amendment in Committee to probe the Government’s intentions and
	we do not intend to press this amendment here. It was tabled at an early stage following Grand Committee to signal our continued concern and before we were able to see the Government’s response to that debate.
	At the meeting last week, Edward Timpson said that there would be an amendment to respond to those concerns and we wanted to see the terms of that amendment before finalising our position. We were hoping that the Government would address those concerns by amending the clause to make subsections (3)(b) and (3)(c) subject to an affirmative resolution order. However, unfortunately both the government amendment and the policy statement that was issued alongside it really are a wholly inadequate response to what noble Lords across the House have been saying. Government Amendment 6 would simply delay the implementation of subsection (3)(c), which provides the power to outsource to all local authorities at once. Along with the government amendment, there was also a written commitment to report that decision in some as yet unspecified way. Delaying implementation is really neither here nor there—it is irrelevant—and reporting to Parliament falls far short of parliamentary scrutiny.
	The policy statement that was published does not explain why the Secretary of State is seeking power through a direction rather than through secondary legislation but simply restates the arguments about the need to reshape the market in adopter recruitment. That is an argument with which we would not necessarily disagree but in support of which the Government have provided no evidence. These are important issues, but they are wholly irrelevant to our point that taking powers to institute major change to the national system of adopter recruitment by direction is a completely unacceptable way to treat this House and the other place. We cannot support the Government’s amendment.
	Therefore, our Amendment 4 would retain the powers in subsections (3)(b) and (3)(c) but make their implementation subject to an order by affirmative resolution in both Houses of Parliament. We all support efforts to improve adopter recruitment if this will mean more children finding good homes. The Government’s policy statement sets out why the Government believes that major structural change may be necessary to address the shortfall in adoptive parents despite the 34% increase in the last two years, which is a very welcome improvement. However, even here the statement is contradictory on the role of the powers in Clause 3 in reshaping that market. Paragraph 11 says that the purpose of Clause 3 is to provide a powerful market-shaping lever to help restructure fundamentally the adopter recruitment system, but paragraph 12 says that, in moving towards the Government’s vision for that restructured system, Clause 3 is not seen as the sole or even the principal driver of reform—its role is to drive change only if there is little or no progress in reshaping the structure of the market and reducing the shortfall of adopters. That is because, as the Minister admitted in Grand Committee, Clause 3 is not of itself a solution to the problem of the shortfall of adopters that the Government have identified; Clause 3 itself cannot change that market. Indeed, it
	can be deployed only if and when it has been demonstrated that adopters can be recruited in sufficient numbers by different arrangements.
	The policy statement goes on to outline the real levers for change which are happening now on a voluntary basis and which do not need legislation—for example, the consolidation in the local authority sector through mergers such as that involving St Helens, Warrington and Wigan in my region, the north-west, and the development of commissioning and provider relationships between local authorities in adopter recruitment. The adoption leadership board is encouraging and facilitating these developments, as well as supporting partnerships involving voluntary adoption agencies.
	If these developments were successful, one could envisage that the system would have changed to such an extent that it reached a tipping point at which the use of the power in, say, subsection (3)(c) might make sense. However, if these developments were not successful, what would the Secretary of State do? Would he outsource adopter recruitment from all local authorities anyway when there was no credible alternative? That would be wholly irresponsible and I cannot believe that the Government would take such a risk. Either way, the point is that there really ought to be parliamentary oversight at that point.
	The point is that mobilising the power in Clause 3 becomes necessary, and indeed possible in practice, only if and when the developments between local authorities and the voluntary sector reach a critical mass such that wholesale change across the country is a viable option. That is my concern with Amendments 4A, 4B, 4C and 4D. Together, they would have the effect of applying the affirmative resolution procedure only in the event of the Secretary of State wanting to outsource these adoption functions from all local authorities simultaneously—that is, using the power in subsection (3)(c). If these amendments were agreed, the Secretary of State would still be able to direct significant proportions of local authorities in groups under the power in subsection (3)(b) and require them to outsource their adoption functions. For instance, he might require that in respect of all shire counties or all metropolitan authorities. Indeed, by announcing three or four successive directions, each of which related to a large group of authorities, the Secretary of State could effectively sweep the country without any parliamentary scrutiny. In other words, by using a few directions under subsection (3)(b), he could achieve what I think we all agree we want to prevent, which is the use of subsection (3)(c) without any scrutiny.
	In my view, it is not logical to try to apply the affirmative resolution to subsection (3)(c) but not to do so also to subsection (3)(b). The effect of that would be not to constrain the Government at all, because they could still use the power in subsection (3)(b) successively to include all local authorities. That is my big concern, and it is expressed and supported by organisations in the sector such as Barnardo’s.
	We believe that, apart from in relation to individual named authorities under subsection (3)(a), we should expect the Secretary of State to come to Parliament and, via an affirmative order, outline the progress that has been made and to answer the questions that Members
	would inevitably have—questions such as how secure the changes are, what the national picture is in terms of the number of consortia recruiting adopters, how many adopters are being recruited, and whether the capacity of the voluntary sector has grown and what role it is playing. The voluntary agencies and local authorities might have issues that they would want us to pursue, as would be normal. There would be many legitimate questions, and answers to them could be put on the record.
	The Government are right to address the problem of insufficient adopters. If they wish to review the adopter recruitment system and propose something radically different, they are entirely within their rights to do so. However, they should not try to instigate radical change to a national system on the judgment and pronouncement of an individual Secretary of State. They should come to Parliament so that those proposals could be properly debated and scrutinised in the normal way. That is all we are proposing, and I think it is very reasonable and very normal. I beg to move.

Lord Brougham and Vaux: I should advise the House that if Amendment 4D in this group is agreed to, I cannot call Amendment 5.

Baroness Meacher: My Lords, I rise to speak briefly in support of Amendment 4, to which I have added my name. The noble Baroness, Lady Hughes, has set out the arguments very clearly and I do not need to take up more than very little of your Lordships’ time.
	I understand that the intentions of the adoption clauses in the Bill are to improve the adoption system and to tackle the shortage of adopters. I am sure we all agree with that. Increasing the number of looked-after children appropriately and successfully placed for adoption must of course be a priority, and, again, I am sure we all agree with the Government about that. The question is whether issuing ministerial directions affecting adoption services across swathes of the country without parliamentary scrutiny is a desirable way forward.
	If local authorities were removed from the adoption roles, as envisaged in Clause 3, the voluntary adoption agencies would need to increase their capacity fivefold, as I understand it. We could expect severe disruption of the system and a serious shortage of adopters for some years in the local authority areas affected. We would feel content if named authorities were dealt with in that way, because presumably there would be very serious issues in those authorities, but the idea of blanket shifts in this direction, using directions without any parliamentary scrutiny, sounds disproportionate.
	My second concern is that Clause 3 risks fragmenting the system, as all councils would remain responsible for placing children for adoption and matching them with families. My understanding is that adopter families greatly value having continuity of social workers through the entire system and that they would not welcome changes simply because of alterations to the system as envisaged under Clause 3.
	If a local authority fails in its duty in the adoption field, it is clearly important that the Government are able to intervene, and of course they can under Section 7A of the Local Authority Social Services Act 1970. Also,
	as has already been said, the amendment does not touch the right of a Secretary of State to intervene without any parliamentary involvement with directions in relation to specific named local authorities.
	I understand that the Government have accepted the principle of our amendment in relation to directions affecting all local authorities, as the noble Baroness, Lady Hughes, said, but not in relation to directions affecting one or more descriptions of local authorities, which I understand could affect, for example, all boroughs throughout the country. Perhaps the Minister can explain why it is right and proper to have a statutory instrument laid before Parliament and approved by a resolution of each House of Parliament in relation to changes applying to all local authorities when the same principle is apparently not acceptable for directions applying to all boroughs, for example—and perhaps some weeks later all county councils and all other specific classes of local authority.
	I confess that I am somewhat confused by the apparent lack of logic in the Government’s position. Does the Minister accept that the amendment does not prevent reform but merely ensures proper parliamentary oversight in a more consistent way than he currently envisages?
	I hope that the Minister will be willing to think again and explore ways in which he might come close to meeting this amendment—I was going to say half-way but I do not think that that would work either. What we really want is parliamentary oversight if more local authorities than can be reasonably named are going to be affected in this way.

Baroness Butler-Sloss: My Lords, I have also put my name to Amendment 4. I am not too worried which of the various amendments finds favour with the Government, but I want the Government to look at where we stand at the moment. I do not want to repeat what either of the noble Baronesses has already said, but my concern is a general one. If a future Government became overenthusiastic, under the existing clauses there is a possibility of wholesale interference with various local authorities, either all together or singly by picking up on them one after another.
	I am aware of this issue from the newspapers, but I used to be aware of it when I had local authorities appearing before me—my heart would sink when I saw the name of a particular local authority, because I knew that the way that it would behave in relation to the particular child coming before me was not up to standard. Indeed, I would use a phrase that has been used with regard to some government departments in the past that it was “not fit for purpose”. That, we know, is true of some local authorities even today, and that is very sad.
	However, the issue needs to be dealt with in a less than heavy-handed way. There needs to be a degree of delicacy in how one deals with this. I would like the Government to reflect on the best way to bring forward to this House how we can ensure that any overenthusiasm of future Governments might be tempered by the requirement to show Parliament that what they want to do is appropriate, necessary and proportionate.

Baroness Hamwee: My Lords, I have Amendments 4A, 4B, 4C, 4D and 6A in this group. They have already been trailed. When I first became aware of a proposal for the Secretary of State to issue directions about local authority adoption functions, I shared the alarm which was expressed, because I am pretty unreconstructed when it comes to local authority powers. On the other hand, having heard some of the issues which seem to lie behind problems with recruiting adopters, during the debates that took place during the work of the Select Committee, at one point I wondered whether adoption services should be nationalised. My pendulum has swung back to the middle.
	I am reassured from what the Minister has said that the clause is not about failure or the underperformance by individual local authorities; it comes about because of concerns about the system, and systemic underlying problems. The amendments in my name and those of the noble Baroness, Lady Eaton, the noble Viscount, Lord Eccles—also members of the Select Committee—and my noble friend Lord Storey, flow from that. They are aimed at building on and improving what we are presented with in the Bill. It has been voiced again today. What has very much exercised noble Lords is ensuring that Parliament is not sidelined. I realise that a direction under paragraph (c) would be very different from directions under paragraphs (a) and (b) of new subsection (3), and I will come back to that in a moment.
	Our amendments would turn directions relating to all local authorities into an order requiring the agreement of both Houses through the affirmative procedure. That would mean the Minister explaining the position, and both Houses debating it with an order not to be made before March 2015. The parliamentary timetable suggests to me that it is very unlikely an order would be made two months before a general election. So I was glad to see the Government Amendment 6 and even more pleased when the Minister told me that he wanted to add his name to our amendments but was too late for the print of the Marshalled List.
	The Select Committee said that local authorities should have the time,
	“to develop viable and achievable alternative proposals.”
	We see that they are already doing so. We heard in the Committee of successful structures in the “tri-borough arrangement” as it is called in London—the three boroughs—and with three local authorities in the north-west. I understand that there are now probably five groupings involving 12 local authorities, which return their data together and are coming together in new structures.
	The noble Baroness talks about the levers for change, whether what we may have will be enough, and whether it needs a heavy hand. I do not think that this is proposing a heavy hand. But if an order is proposed by the Secretary of State, as I see it—and I hope that the Minister can confirm this—it would not be a lid, perhaps here a portcullis, coming down. It would be a point in a sequence development of work, a transitional point which could be, and I hope if necessary would be, tailored as to which of the functions in new subsection (2) was brought into play. It would not be necessary to make an order dealing with all the functions
	in new subsection (2). So it is not the nuclear option, which I at first understood it potentially to be, or as it has been described.
	A direction under new subsection (3)(b)—I confess that I had not initially appreciated how this might differ from an order under a statutory instrument—would allow for a lot more continuing work, after as well as before a direction with the local authorities concerned, which is a much more flexible way of working. It has been described to me as a quality improvement measure, with the possibility of collaborative development of the detail of the direction before it is given. Thinking about how that has worked on other subject areas within child protection and children services work, I can see that would work well. That leaves me unable to support Amendment 4.
	The Government have already given commitment to giving notice to a local authority before using the powers in new subsections (3)(a) and (3)(b). So there would be an opportunity for that way of—I am sorry, I hate the word—iterative working, a development and refinement process. The steps which have already been taken since this debate started earlier in the year, or at the end of last year, when the Government made their announcement, have been constructive and productive, with the adoption form grant, the adoption register, the adoption leadership board and the equalisation of fees between local authorities and voluntary agencies. I mention voluntary agencies because it will be essential to work with the voluntary sector. Capacity and culture issues are both important. They are not going to change overnight. But the clause, as it would be amended by our amendments, allows more than adequately for this.
	I hope that the directions in new paragraphs (b) and (c) will never be used, because it will not be necessary. I hope, too, that the Minister can confirm that over-enthusiasm, as the noble and learned Baroness has called it, would not mean that the paragraph (b) direction would be applied to all local authorities. That seems to me to be something that would be very open to challenge, given the rest of the structure of the clause.
	I see why the Government feel that they need to have reserved powers, operated as I described, and that means that I cannot support Amendment 6. I hope that the House will feel that Amendments 4A to 4D and 6A are the way forward. I am comfortable with the logic of this, and I am usually over-logical about things. It is not heavy handed. It might almost be delicate—I will not go quite as far as to claim that—but it is a way forward.

Lord Storey: My Lords, I cannot keep using the expression that I am a new person to your Lordships’ House, but I am still on a big learning curve, and I like to put into simple terms some of the language that is used.
	When I saw this clause, I remembered that something like 84% of adoptions last year were carried out by local authorities and that, as we have heard, the majority of them do a fantastic job. That is recognised by the voluntary sector and, equally, the local authorities realise how important the voluntary sector is. When the Bill first came to your Lordships’ House, the
	voluntary sector, quite rightly, said, “Look, we could not cope if you took it all away from local authorities. We would not be able to do that”.
	At the time, it seemed right that the Government pointed to the fact that some local authorities had an appalling track record. As I have said, it is a very small number, but some had an appalling track record. Indeed, the Local Government Association would be the first to recognise that. So it seemed absolutely crucial that the Secretary of State should have the power, if local authorities were underperforming and were not prepared to work together and co-operate, to take that responsibility away from them. I see the logic and the importance of that because, at the end of the day, we are talking about the children. However, I did not see the logic of having the power to take the responsibility away from every local authority—that seemed plain daft to me—given the expertise and commitment that local authorities have and the amount of work that they do. I was therefore delighted when the Minister tabled an amendment which ensured that nothing could happen before March 2015. But that still means, unless I have misunderstood it, that the Secretary of State could say in March 2015—although, as my noble friend Lady Hamwee said, it would be two months off a general election—“We are going to do this, and that is what we are doing”. That would not be in the best interests of adoption and children.
	If in the mean time the Government work with local authorities and the voluntary sector and different structures come together with different ways of operating—and if it is decided that tri or quad groups working together is the structure that we want—that is great. Whatever structure is arrived at, the Secretary of State should come to Parliament and both Houses should be able to say yes to it. I was not used to the phrase “affirmative procedure” in the amendment. If the Minister feels able to support Amendments 4A to 4C, as his comments suggest, that would be a result with which we could all be happy.
	I do not share the concern that the Secretary of State might use Amendment 4B to take away the responsibility from boroughs and metropolitan bodies. That would not happen in the timescale because, as we have heard, 84% of authorities carry out adoption. However, if some local authorities are letting down children or the adoption service, in extreme cases the Secretary of State would have that power. If these clauses and amendments are accepted, it will mean that local authorities have come to the table and discussed these matters even more rapidly with the voluntary sector. I welcome the work that the Minister has done in bringing those people together.

Baroness Eaton: My Lords, I support the amendments in my name and those of the noble Baroness, Lady Hamwee, the noble Lord, Lord Storey, and the noble Viscount, Lord Eccles. I do not wish to rehearse all the points that my colleagues have already made but it is important to say that part of what we need is a cultural change of collaboration and working together in local authorities to create a climate where adoption happens with ease for all the children needing a loving home.
	The word “direction”, which hangs over local authorities, is not conducive to a working, productive relationship. It is dictatorial and does not create the atmosphere that we are all looking for. As the noble Lord, Lord Storey, said, we need the Secretary of State to have the absolute power at the end, if it is required, but the amendment ensures that there is justification for anything that is taken before both Houses of Parliament, and I am sure that we will all be more comfortable about such scrutiny. The idea that, with the direction, the Secretary of State merely has to give his reasoning but does not give anyone the chance to fully debate the matter and make changes would not be helpful in this process.
	I support these amendments and I hope that they will take us much further forward in obtaining the co-operation we need and the adoption system that we are looking for.

Baroness Walmsley: My Lords, I support the amendment in the name of my noble friend Lady Hamwee.
	A point was made by two earlier speakers that the Secretary of State could use successive orders under new Section 3A(3)(b) to achieve what new subsection (3)(c) provides for—in other words, to wipe out all local authorities from these various functions. Given the fact that new subsection (3)(c) is in the Bill, any Secretary of State who were to try that would, I am sure, be challenged for an abuse of process. I cannot see any Secretary of State trying to do that. It would be eminently challengeable. To colleagues who fear that scenario in the future, I suggest that it is not likely to happen. We have in my noble friend’s amendments a process—which I think the Government will be able to accept—to bring about parliamentary scrutiny if the powers in new subsection (3)(c) were used. That is the right level of parliamentary scrutiny required.

Lord Nash: My Lords, I am grateful to those noble Lords who have contributed to this debate. I am acutely aware of the concerns Peers have raised about this clause. I thank particularly my noble friends Lady Hamwee, Lady Eaton, Lord Storey and Lord Eccles for helping me to understand the nature of those concerns.
	Following constructive discussions, I am persuaded that the Government’s amendment and the commitment to report to Parliament do not provide for the parliamentary scrutiny that many noble Lords would wish to see. I am therefore very grateful to my noble friends for tabling their Amendments 4A to 4D and 6A. I am persuaded that it is right for a direction to all local authorities to be subject to full and rigorous scrutiny by Parliament. I therefore confirm my support for their amendments and, if they are accepted, I will not of course need to move my Amendment 6.
	Before I address Amendments 4 and 5 I remind noble Lords of the rationale of the clause as set out in the recently published policy statement. The clause is intended as a backstop should the current and significant efforts of local government and voluntary agencies prove insufficient. Unfortunately, we have to accept that this is a possibility as adoption agencies have to work within a flawed system. The fundamental problems
	are the structure of provision, based around local boundaries, and the unhelpful incentives associated with this structure. This constrains the ability to recruit adoptive parents in sufficient numbers. As a result, the system fails to deliver enough adopted parents to meet national demand, as we have already discussed.
	However, let me be quite clear: it is the system that is failing to meet national demand, not the individual local authorities and voluntary adoption agencies that make up the system. The distinction is important and can be demonstrated by statistics. Recently published Ofsted data showed a 34% increase in adopter approvals in 2012-13 compared to the previous year. This is a huge achievement on the part of individual agencies. Local authorities have delivered a 32% increase in adopters recruited and approved and voluntary adoption agencies a 53% rise, and they should be congratulated.
	Impressive though these numbers are, the sad truth is that this is still not enough to meet the needs of the number of children waiting for a loving home. At the end of March 2013, there were 6,000 children approved by the courts for adoption, waiting to move in with a permanent family. This is 15% higher than the year before. Furthermore, we estimate that we need around 3,100 additional adopters to meet the existing demand of the children who were already waiting with a placement order.
	So we face a real challenge to recruit more adoptive parents. To meet it, we need to transform the system and tackle the underlying structural problems. I feel that we are well placed to do so. After welcome and constructive discussions with colleagues from local government and the voluntary sector, we have an agreed proposition for a national adoption leadership board. This is a significant milestone and demonstrates a collective commitment to take nationally driven action to close the adopter recruitment gap. The board’s members will be senior figures from the core organisations within the adoption system in England. I therefore see this board as the principal forum to deliver significant improvements in the performance of the adoption system.
	Under the board’s leadership, we expect to see significant changes in the shape and structure of the providers available, including increasing consolidation and scale among local authority adoption agencies; growth in the capacity of the voluntary sector and an increase in the proportion of adopter approvals for which it is responsible; and more partnership working between local authorities and voluntary adoption agencies, local authority employees, spinouts into mutuals and the entry of some new providers.
	These sorts of things are already happening. For example, I was pleased to see from the recent Ofsted publication that, as my noble friend Lady Hamwee referred to, 12 local authorities now provide adoption services under joint arrangements. These are Bedford borough and Central Bedfordshire; the west London tri-borough; Leicestershire and Rutland; Shropshire and Telford; and, as the noble Baroness, Lady Hughes, referred to, Warrington, Wigan and St Helens.
	I also welcome the partnership arrangements that exist between local authorities and voluntary adoption agencies—for example, those operating in Harrow,
	Kent, Cambridgeshire and Oxfordshire. We just need to see these types of arrangements happening more quickly and more often.
	Clause 3 therefore provides levers of last resort. It is the backstop to a number of things that Government are doing to support local authorities and voluntary adoption agencies. I have already mentioned the Government’s support for the new national adoption board. We have invested £150 million through the adoption reform grant to support local authorities in 2013-14. We are also investing £16 million to build the capacity of the voluntary sector.
	We know that these investments are having an impact. We expect there to be a number of new voluntary adoption agencies in the near future and we know that many local authorities have made good use of the adoption reform grant. For example, they have recruited additional staff, provided staff training and development and funded a range of marketing activities to recruit more adopters. I was particularly interested in the work the Southwark area is doing, as I have already mentioned. It used some of its funding to develop an innovative recruitment campaign to target harder-to-reach prospective adopters using a reward scheme. Southwark is also working with Lambeth to fund an outreach worker to promote the recruitment of adopters from the BME community.
	I will now explain the government amendment, which tries to address some of the concerns raised in Grand Committee. Amendment 6 delays the implementation of new subsection (3)(c) until March 2015 at the earliest. It therefore provides more time for current reforms to embed and for the new leadership board to have an impact. The Government also commit that the Secretary of State will report to Parliament before issuing any direction under new subsection (3)(c).
	This report would set out an updated analysis of the state of the adopter recruitment market. It would cover both the local government and voluntary sectors and analyse their current structure and effectiveness. It would also include the latest estimate of the adopter recruitment gap. In essence, it would justify the requirement for a direction under new subsection (3)(c). Any such direction would provide sufficient time for new arrangements to be put in place. This is an important point as structural change cannot happen overnight.

Baroness Hughes of Stretford: My Lords, I would like to clarify whether the Minister is withdrawing Amendment 6, as I thought he stated earlier on.

Lord Nash: Yes, if I accept Amendment 6A, I do not have to move Amendment 6, because it is covered, I believe. If that is not clear, we will have a further conversation, I am sure.

Baroness Hughes of Stretford: For absolute clarity, is the Minister saying that he is withdrawing Amendment 6?

Lord Nash: My Lords, I am and I am accepting Amendment 6A.
	In the period prior to March 2015, the Secretary of State would retain the capacity to issue directions under new subsections (3)(a) and (3)(b), if absolutely
	necessary. As I set out in my policy statement, these directions would follow due process. For example, they would be preceded by a letter setting out the Secretary of State’s intention to issue a direction. This would explain the underlying reasons and provide the affected local authorities with an invitation to respond. Only then would the Secretary of State take a final decision to issue the direction. In considering the issuing of any direction, I expect the new adoption leadership board to play a key advisory role.
	Amendment 5 would largely reduce Clause 3 to an intervention power to tackle individual local authorities. But this is not the purpose of Clause 3 which, as I have said, is intended to tackle whole-system failure. Nor would such an intervention power be necessary. As noble Lords are aware, the Secretary of State already has the power to intervene if the performance of individual local authorities requires it.
	We have already seen a welcome increase in the number of adoptive parents recruited. This is a testament to the efforts of adoption agencies to rise to the challenge. Simply having Clause 3 in the Bill has undoubtedly helped to galvanise agencies, as referred to by my noble friend Lord Storey, but Amendment 5 would simply undermine this stimulus to further progress. I therefore urge the noble Baronesses not to move it.
	Turning to Amendment 4, the Government do not agree that directions to “one or more descriptions” of local authorities under new subsection (3)(b) should also be subject to the affirmative procedure. New subsections (3)(b) and (3)(a) provide the Secretary of State with the flexibility to take swift, decisive action if required. For example, to answer the point made by the noble Baroness, Lady Meacher, they could be used to direct a small number of local authorities who were resisting a successful regional initiative, driven by other local authorities, to collaborate and work more efficiently. A direction given in this way would be the result of a dialogue with the affected authorities. It would thus be an iterative process, not a unilateral declaration.
	I can confirm to my noble friend Lady Hamwee that it is not the intention to use new subsection (3)(b) as a method of achieving the aim of new subsection (3)(c) without the affirmative procedures. My noble friend also asked whether the direction has to be about all the functions in subsection (2), or merely some of them. She is right; it can be about all or any of the three function in that paragraph.
	I understand that the noble Baronesses, Lady Hughes and Lady Meacher, and the noble and learned Baroness, Lady Butler-Sloss, wished to make the case for the affirmative procedure and I have agreed that this should apply in relation to new subsection (3)(c). I am also surprised that Amendment 4 does not encompass the March 2015 milestone. This is an important staging post to ensure the reforms have maximum impact. I therefore ask the noble Baroness, Lady Hughes, to withdraw her amendment.

Baroness Hughes of Stretford: I thank all Members who participated in this debate. It is an important issue and it is right that it was aired again on Report. The noble and learned Baroness, Lady Butler-Sloss, characteristically put her finger on one reason why
	this is important: the danger of allowing any Government, now or in the future, to interfere in a heavy-handed way with local authority functions without parliamentary scrutiny. That is the key issue.
	The noble Baronesses, Lady Hamwee, Lady Eaton and Lady Walmsley, and the noble Lord, Lord Storey, all felt that there was no need for the affirmative resolution in relation to new subsection (3)(b). The Minister’s statement has just put on the record that the Government would not use new subsection (3)(b) as a way of progressively working through local authorities in this country, and thereby achieving new subsection (3)(c) through successive application of new subsection (3)(b). That was a very helpful statement to put on the record and it gives some reassurance. However, I say to the noble Lord, Lord Storey, and the noble Baronesses, Lady Hamwee, Lady Eaton and Lady Walmsley, that the noble Baroness, Lady Meacher, pinpointed the danger of that. Although the Minister said that new subsection (3)(b) could be used for small groups of local authorities, equally, it could be used for large groups of them in exactly in the way that the noble Baroness identified: all metropolitan districts or all boroughs, and so on. It would take only two or three directions of that nature to encompass all the local authorities in the country.
	However, the Minister’s statement putting it on the record that the Government will not do that is helpful. With that, I think we have consensus across the House; this was evident in Committee and in the meetings that have taken place since. That consensus is on the principle of parliamentary scrutiny—particularly when the Government are implementing significant change in public services, which they would be if they applied new subsection (3)(c)—and that implementing change on that scale, involving all local authorities at once, should have the affirmative resolution procedure. It is very good that the Government have at last conceded the strength of feeling in the House on that issue and agreed the affirmative procedure in relation to new subsection (3)(c). Having achieved that, and with the Minister’s statement in relation to new subsection (3)(b), I beg leave to withdraw my amendment.
	Amendment 4 withdrawn.
	Amendments 4A to 4C
	 Moved by Baroness Hamwee
	4A: Clause 3, page 2, line 33, after “requiring” insert “one or more named”
	4B: Clause 3, page 2, line 34, after “England” insert “, or one or more descriptions of local authority in England,”
	4C: Clause 3, page 2, line 36, at end insert—
	“(1A) The Secretary of State may by order require all local authorities in England to make arrangements for all or any of their functions within subsection (2) to be carried out on their behalf by one or more other adoption agencies.”
	Amendments 4A to 4C agreed.
	Amendment 4D
	 Moved by Baroness Hamwee
	4D: Clause 3, page 2, line 43, leave out from beginning to end of line 2 on page 3

Lord Faulkner of Worcester: My Lords, I must advise the House that if Amendment 4D is accepted, I am not able to call Amendment 5 for reasons of pre-emption.
	Amendment 4D agreed.
	Amendments 5 and 6 not moved.
	Amendment 6A
	 Moved by Baroness Hamwee
	6A: Clause 3, page 3, line 2, at end insert—
	“(2) In section 140(3) of that Act (statutory instruments containing subordinate legislation that are subject to the affirmative procedure), before paragraph (a) insert—
	“(za) under section 3A(1A),”
	(3) The Secretary of State may not make an order under subsection (1A) of section 3A of the Adoption and Children Act 2002 (as inserted by subsection (1)) before 1 March 2015.”
	Amendment 6A agreed.
	Amendment 7
	 Moved by The Earl of Listowel
	7: After Clause 6, insert the following new Clause—
	“Looked after children: duty to provide information about support on returning home to care of parents or others with parental responsibility
	(1) Except in circumstances prescribed by regulations, a local authority must provide the information specified in subsection (2) to—
	(a) any person who has contacted the authority to request information about “return home support services” for a looked after child returning home to the care of P; and
	(b) any P within the authority’s area, to whose care a looked after child has returned, who has contacted the authority to request any of the information specified in subsection (2).
	(2) The information is—
	(a) information about the return home support services available to people in the authority’s area;
	(b) information about the authority’s duties under section 22(3A) of the Children Act 1989 (“return home support services”: personal budgets) and regulations made under it;
	(c) any other information prescribed by regulations.”

The Earl of Listowel: My Lords, I shall speak also to Amendment 8. Before I do so, I join in thanking the Minister for the helpful meetings that he arranged between Grand Committee and Report and for the extremely encouraging meeting with the new chief social worker. As vice-chair of the All-Party Parliamentary Group for Looked after Children and Care Leavers, I agree with his analysis that the biggest difference to be made for these children and their families is in raising the status of child and family social work and recruiting and retaining the best workforce for them. Finally, I thank the Minister, the Minister for Children and Families and the Secretary of State for moving forward with the staying put amendment, which will make a huge difference to many young people leaving care. I am so grateful for that but I will not go further now because of the need to move forward.
	Amendments 7 and 8 would ensure that when young people return from care to their biological families they have the support that they need to be successful in doing that. I will quote briefly from a letter published in the Telegraph yesterday, which had among the signatories Peter Wanless, chief executive of the NSPCC, Dr Maggie Atkinson, the Children’s Commissioner for England, and Dame Clare Tickell, the chief executive of Action for Children. The letter said:
	“The Government has moved decisively to improve prospects for adopted children by offering an entitlement, in the form of a personal budget, to services for them and their parents. But most children who are taken into care are not adopted. They will return home where research shows that half of those who entered care as a result of abuse or neglect will suffer further harm unless changes are made. Too many young people end up in a revolving door of care that is damaging for them and has a significant cost for local authorities. The support offered to adopted children should also be made available to those who return home after a stay in care. Support should be driven by need and not by legal status”.
	The purpose of my tabling this amendment again is to secure an assurance from the Minister that we can meet subsequently and discuss this issue and look at the welcome work that the Government are doing and some of the gaps that remain. I hope to establish a timeline for change. I will come to the problem in just a moment but I would be grateful for an opportunity to meet officials and, I hope, the Minister and any interested colleagues to look at how to take this forward and to monitor progress. It is moving in the right direction at the moment but it needs to move further and faster.
	The problem, as laid out in that letter, is that the NSPCC conducted some research a year or so ago and was horrified to find that half of young people returning home from care were then returned to care fairly shortly afterwards. The needs of the families were not being addressed. They were still alcoholic or misusing drugs and those children were being returned home to unsafe places. Furthermore, what one finds in these circumstances is that children who are returned home, then taken back into care, then sent home again and taken back into care are damaged by that. In the worst cases, they lose all trust in adults and become people who are dependent on the state. They may be in prison. They are very damaged and it is hard to help them to recover from that damage.
	I am extremely grateful for the actions that the Government have been taking following that NSPCC report. In their consultation which looks at permanency for children, they have looked at returning children from care and dealt particularly with the issue of accommodated children. There are new measures, including that there should be a plan established by each local authority for those children returning from care. I am grateful for the fact that they have set up a working group, which includes the NSPCC, to look at just this matter. There is one other step which the Government are taking and for which I am also grateful. I was pleased to meet officials and to hear from them that there will be opportunities to meet further with them and the NSPCC following this debate.
	I really am grateful for the measures that the Government are taking but I am concerned that there are still some gaps. In particular, the consultation
	which has just been completed deals only with accommodated children. That is the majority of children who return from care but a substantial minority have either interim care orders or full care orders, and those are not currently covered by the measures proposed by the consultation. While local authorities have the power to ensure that young people returning from care to their biological parents have the equivalent to the personal budgets we are giving to adopted children—the equivalent of a guaranteed range of services to support those families—there is no obligation on them to do so. Given the many responsibilities that local authorities have and the shortage of resources, the concern is that many will not do that. Finally, there is no consistent assessment of young people and their families before they return home from care to ensure that they are returning to a safe place where they can be secure and have a good, settled life.
	I hope that we can discuss those gaps further subsequent to this debate. I look forward to the Minister’s response. I beg to move.

Baroness Howe of Idlicote: My Lords—

Baroness Jones of Whitchurch: My Lords, I am going to propose Amendment 9. Perhaps I may do that first—I am not intending to close down the debate.
	Amendment 9 which stands in my name is on the subject of maintaining sibling contact. The amendment would require local authorities to give specific consideration to enabling children in care to remain in contact with their siblings. Many noble Lords here today will remember that we had a very good, if disturbing, discussion on that in Grand Committee.
	First, we were confronted with some stark statistics. Some 63% of children in care whose siblings are also in the care system are separated from them. Surprisingly, those living in children’s homes are much more likely to be separated than those in foster care. What is more, children care very deeply about this separation; 85% said that it was important to keep siblings together and more than three-quarters said that councils could do more to help brothers and sisters keep in touch with each other. Secondly, we heard a number of moving individual stories of the distress caused to children who were separated from and unable to contact their siblings. For many, the relationship was more important than that with their parents and was a particular bond when they had been through a traumatic family break-up or protected each other in an abusive family. Often the elder children felt a particular responsibility for their younger siblings and were desperate when they could not check that they were okay; they had almost a quasi-parental concern for them. Although there will be occasions, of course, when children need to be separated for very good reasons, it seems that in the remaining majority of cases a lack of priority or perhaps just practical issues have been allowed to develop as an excuse for contact not happening on a regular basis. Our amendment would make that sibling contact a priority in social work practice and would give the requirement the additional weight of being in the Bill.
	When we debated this in Committee, and in subsequent discussions, the Minister showed sympathy for the problem but resisted the need for primary legislation.
	He drew our attention to the current requirement for children’s individual care plans to set out the arrangements for sibling contact. He has also drawn up updated guidance on sibling contact for children in care. Of course, we are very grateful for that additional work. However, the point is that the previous guidance had little effect on practice on the ground, as the statistics have shown, so it is hard to imagine that the updated guidance will be any more effective. That is why we believe that emphasising the importance of this issue in the Bill can send a stronger message to those who are currently routinely failing to nurture sibling contact.
	The Minister also referred to the views of an expert group, which looked into this issue and concluded that more needed to be done to improve practice on the ground. Obviously, we agree that more can be done in terms of advice, training and good practice dissemination. I do not know when that group reported its findings, but, again, so far there appears to be little evidence of a major improvement in sibling contact as a result of this.
	That is why we believe that our amendment could act as a catalyst for change and help to drive the change in social work practice on the ground that we all desire. We have to find the right balance between key principles being set out in primary legislation and the detail that can be spelt out in statutory guidance. This is becoming an ongoing theme of our debates on the Bill. There may be a contradiction in the position adopted by the Minister and the Government if we compare their views on this to the position adopted on the ethnicity issue that we debated only an hour or so ago. There the Government took the view that if it was in the Bill people would take it very seriously and therefore they needed to remove it from the Bill so that it would not be taken so seriously. On the other hand, we are saying that people are not taking it seriously because it is only in secondary legislation so we need to put it in the Bill. However, the Government are very resistant to that, even though they are sympathetic to our arguments. There is a dichotomy about how we deliver that change on the ground.
	We believe that the right to sibling contact for children in care, unless there is a specific and justified reason where it is not appropriate, is sufficiently fundamental for it to be in the Bill. We therefore hope that noble Lords will support our amendment.
	There are other amendments in this group—Amendment 7, which was very ably introduced by the noble Earl, Lord Listowel, and Amendment 10, will be introduced by the noble Baroness, Lady Young. Those amendments were debated in Committee and received considerable support. Both the noble Earl and the noble Baroness made very coherent cases and I am sure that we will have a good debate on those amendments again. I hope that noble Lords will continue to support them.

Baroness Butler-Sloss: I hope it is convenient to follow the noble Baroness now on the sibling point so that these points are kept together. My name is on Amendment 9.
	As I said in Grand Committee—there are people in the Chamber who may not have heard this so forgive
	me for saying it again—children came to talk to us in the Select Committee on Adoption Legislation. These children had been adopted or looked after, who were or had been in care. Perhaps the most important issue they raised with me and with another noble Lord on the Select Committee was their relationship with their brothers and sisters. They made absolutely clear the importance of those with whom they had already shared a family life. One girl, who was aged about 15 or 16, said, “I don’t expect to see the children born to my parents after I left home, but I really do need to stay in touch with those I knew”. Another boy, aged about 10 or 11, said, “I looked after my younger brother and sister. I am so worried about what is happening to them; nobody will tell me. I wake up each night and think: are they all right? Why can’t I find out what is happening and why can’t I see them?”. That was an adopted child who was extremely happy in his adoption placement but who remained extremely worried about the children who remained at home.
	So this is a really important point, and as the noble Baroness, Lady Jones, said, if it is in primary legislation, it will have that added bit of importance. Social workers do not always recognise this, and neither do adopters. It is very important that the message is put forward: it is not that children should see their former natural parents, which may be totally inappropriate; but in certain cases there will be children who should see those they have had to leave behind. It is that group of children for whom the amendment has been tabled. It is a very important point, particularly where the child has been adopted. The new adoptive parents may well not appreciate the importance unless it is up front. They are not going to read social work practice—that is the last thing in the world they are going to read. They may not want any relationship. However, for both the social workers and the adoptive parents, this is an important factor in the welfare of the child about whom we are talking. It really matters.

Baroness Young of Hornsey: My Lords, in speaking to Amendment 10, I, like other noble Lords this afternoon, place on record how grateful I am for the help of the Minister and his officials in trying to get to grips with this issue of access to records for care leavers, especially as it was not originally part of the Bill. I understand why we needed some considered negotiations around the subject. I found those very useful, as did my colleagues from the access to records campaign group, which comprises professionals from the Care Leavers’ Association, the British Association for Adoption and Fostering, the Association of Child Abuse Lawyers, the Child Care History Network, the Post Care Forum and Barnardo’s. It is also supported by the fostering and adoption charity, TACT.
	Some of the key issues that this amendment seeks to address are the lack of consistency across the country’s local authorities in the way they deal with giving access to records to care leavers, and also, importantly, how they deal with the issue of redaction of those records. A number of care leavers gave us evidence of how they received notes from their past which were essentially incomprehensible because of the amount of redaction that had taken place. Again,
	that seems to depend on whereabouts you live in the country. That should obviously not be the case. In the amendment, we call for clear, effective statutory guidance and the opportunity for care leavers to access support once they have accessed their records.
	That is another important point. I am not sure that all noble Lords are aware how difficult that experience can sometimes be for people. It does not matter what age you are. This is not just for young people who have recently left care. Many older people also have that experience. At the moment, no kind of support is necessarily offered to them. Of course, care records must be properly maintained and every effort made to trace records from decades ago as well as more recent ones. That ties in to my earlier point about the ages of people seeking their records. In fact, colleagues at the Care Leavers’ Association say that the average age of those seeking its help in looking for their records is around 35 and goes up to a 90 year-old—who found her records, triumphantly. Whatever age you are when you eventually get your records, if you are fortunate enough to do so, the experience can be difficult.
	During meetings with officials, it emerged that both the Minister—the noble Lord, Lord Nash—and the Minister for Children and Families agreed that the current wording on access to records in the care planning statutory guidance could be strengthened. Colleagues from the access to records campaign and I have worked with officials on that particular subject. It is also my understanding that Ministers have agreed to work with us on a programme to ensure that front-line managers and staff are aware of the new guidance. Again, that was raised earlier this afternoon in relation to how statutory guidance is used and the extent to which people take it seriously. We need to ensure that they do—once we have, as I hope, developed some new guidance in this area.
	That activity will include supporting a round table for local authorities and voluntary sector organisations, and sending messages via the department’s various communication routes to relevant bodies which can raise that issue with their local authorities and make sure it is firmly on the agenda. We also understand that officials have spoken to the National Care Advisory Service, which runs the National Leaving Care Benchmarking Forum for managers. It said that it would be happy to run a session where the managers talk about how to improve their local practice, based on the proposed revised guidance and best practice. Could the Minister confirm my understanding of that? Also, would he be prepared to ensure that the voice of older adult care leavers is heard during all consultation processes and that an assessment of the effectiveness of strengthened statutory guidelines is carried out?

Baroness Howe of Idlicote: My Lords, having listened to the comments on the other amendments in this group, I am very interested in what the Minister will say in reply. I certainly have considerable sympathy with what has been said. However, I added my name to the amendment of my noble friend Lord Listowel and it is on that amendment that I wish to press a little further.
	The Government’s consultation on permanence goes some way to ensuring that voluntarily accommodated children receive the support they need, but, as was made clear from the reference to the letter in the Telegraph, an awful lot of important bodies in this area, as well as academics, support the need for further action. As others have said, the Government’s attempts to improve the adoption system should undoubtedly be praised. However, adoption is not the outcome for the majority of looked-after children. Instead, most children placed in care return home to parents or carers. In 2012, 10,000 children went home after a stay in care compared with just 3,440 who were adopted.
	However, many children go home without a proper assessment of their and their parents’ support needs prior to leaving care or after they have returned home. For example, in cases where children were returned to households with a high recurrence of drug and alcohol misuse, only 5% of parents were provided with treatment to help them address their substance abuse. The lack of these types of support services often results in children going back home to face a significant risk of experiencing further abuse. In fact, research by the NSPCC shows that around half the children who came into care because of abuse or neglect suffered further abuse when they returned home. Recent DfE statistics show that a third of children who return home subsequently go in and out of care twice or more. Suffering from or being at risk of further abuse, and moving in and out of care, only compounds these children’s already traumatic childhoods and can cause significant long-term harm.
	The NSPCC believes that a child should only return home from care when there has been a comprehensive assessment of that child’s needs and effective support is provided for children and their parents, in particular to tackle the underlying problems—as well as drugs and alcohol, there might be domestic violence, mental health conditions or generally poor parenting. Research shows that such an entitlement is unlikely to place an additional burden on local authorities—it could save them money, given the high financial cost of failed returns home. In one case highlighted in the recent DfE data pack, the total social care costs were £22,068 due to the child having frequent episodes in care. That was as opposed to an estimated cost of £13,124 if support to tackle substance abuse had been provided to the child’s parents.
	The Bill provides an important opportunity to address this issue and ensure that local areas are required to provide such an assessment and the subsequent necessary support. I very much hope that, along with these other amendments, the Minister will give welcome attention to what best can be done under these circumstances.

Baroness Tyler of Enfield: My Lords, I have a lot of sympathy with these amendments, particularly Amendments 7 and 8 in the name of the noble Earl, Lord Listowel, and especially the need for greater support for children returning home from care. As other noble Lords have said, the new proposals that the Government recently put out are very welcome and are certainly a good step in the right direction. I
	commend them for making these proposals. However, as we have already heard, almost half of children who return home re-enter care, and a third have gone in and out of care twice or more. It is a vicious circle and the impact on the child can be devastating.
	Since we are now on Report, I restate an interest as chair of CAFCASS. We have already heard that much of the problem is that the very problems of the parents that have resulted in the children going into care in the first place generally remain unresolved. Unless there is more help and support available to the family, particularly to the parents, to help them deal with those problems—be they to do with substance misuse, domestic violence, mental health or alcohol abuse—the chance of the child coming home successfully to the parent and having the sort of loving and stable household and help that they need is slim indeed. I look forward to the Minister’s comments on what more can be done to address this issue.

Lord Warner: My Lords, I support my noble friend’s Amendment 9, which puts contact between siblings in the Bill. I apologise to the House that I was unable to take part in this Bill’s proceedings in Committee because I was engaged on the Care Bill. However, I was on the Select Committee on Adoption Legislation and I echo the points made by the chairman of that committee, the noble and learned Baroness, Lady Butler-Sloss.
	On the basis of my six years as a director of social services, I have a general point about why the Minister should concede on Amendment 9. While I was director, the Children Act 1989 was passed. That was a classic example of Parliament saying in a Bill that decisions about children should be taken on the basis of the best interests of the child. In the overwhelming majority of cases where siblings are separated, the best interests of the child are to maintain that contact. Sibling contact is often a private child’s world, which is not always well observed by adults, whether they are social workers or other adults involved in that child’s life. Maintaining that contact is overwhelmingly important to children. My noble friend has shown that the option of putting it in guidance and relying on best practice has had a good run for its money and it has not worked. We should return to some of the ideas in the Children Act 1989 and put in the Bill the obligation to help maintain contacts between siblings when they are separated. These contacts are in the best interests of the children and very important to them. It costs very little to put that in the Bill.

Baroness Hamwee: I support Amendments 9 and 10. When the noble and learned Baroness was talking, I remembered that when she was meeting children—she shared with the House some of their moving comments—I was in the next room meeting the carers, mostly social workers. When we talked about contact generally, not just with siblings, several of them said that the problem lay in adopters not wanting to know, preferring to see their children as part of the new family and wanting to leave the past behind. Therefore I take very seriously the point that she and other noble Lords have made about the importance of having this in the legislation. Guidance has not been enough and I do not see that it will be enough.
	In support of Amendment 10, in Committee the noble Baroness, Lady Young, gave such an important explanation of the need to know one’s identity that, without wanting to embarrass her, I feel it should be framed. It said a lot about the specific issue about which I was concerned, about descendants of adopted people and, as she has just mentioned, the need of older adults to know about their heritage and background. What she has said seems in line with adoption practice and with Amendment 1, which we have agreed. It is an important way to move practice forward though statute.

Baroness Northover: My Lords, I thank noble Lords for putting down these amendments and for their commitment in this area. We focus here on three areas that greatly impact on the lives of children in care and care leavers. I thank the noble Earl, Lord Listowel, for his thanks to my noble and honourable colleagues. Noble Lords will note that my honourable friend, the Minister for Children and Families, is at the Bar of the House. We appreciate his presence.
	I start with the important issue of children who return home from care, addressed by the amendment of the noble Earl. I thank him for his acknowledgement that support for those returning home is a key priority for the Government. We agree that much greater attention is required to ensure that both the statutory framework and local practice are improved significantly. We are working closely with an expert group, including organisations such as the NSPCC, which are making an invaluable contribution to this work. I hope noble Lords will be reassured that we are strengthening the statutory framework for voluntarily accommodated children since we believe this is particularly weak. We are exploring whether the current statutory framework needs to be strengthened for other children who return home, including those who were previously on a care order and 16 and 17 year-old care leavers. We are also working to improve practice for all children who return home, whatever their legal status while they are in care or when they return home.
	The noble Earl raised the issue of children on interim care orders. We are aware that the Alliance for Children in Care and Care Leavers has raised concerns about children who return home following an interim care order, and whether the new proposals to strengthen the statutory framework will apply to this group. We shall continue to work with the expert group and others to explore how to ensure that we improve the statutory framework where necessary for all children regardless of legal status. I hope he finds that reassuring.
	The noble Earl and other noble Lords asked about personal budgets. The current statutory framework provides sufficient flexibility for local authorities to provide personal budgets if they think this is the best way to meet a family’s needs. We do not think that it would be appropriate to assume that this will be necessary in all circumstances. Therefore, we believe that decisions about financial support and how this is provided should be taken on a case-by-case basis. I hope that he is reassured that it is possible to give that kind of support.
	I can assure the noble Earl that we shall continue to work with the NSPCC and other voluntary sector
	organisations through our expert working group as we develop and implement our programme of work. We should be delighted to meet him to discuss matters further. We know there is a long way to go, but we are committed to ensuring that all children receive the support they need to return home to their families where this is the right way to secure permanence for them. I hope that in due course the noble Earl will be content to withdraw his amendment.
	Amendment 9 on sibling contact was introduced by the noble Baroness, Lady Jones, and is supported by other noble Lords. We are in complete agreement that contact between siblings is of great importance to children in care. I hear what my noble friend Lady Hamwee and others have said on this. We take this very seriously. We believe that the concerns that noble Lords have raised are an issue of practice and are best tackled through strengthening statutory guidance, improving local authority practice and monitoring impact through Ofsted reports. I noted the comments made by the noble Baroness, Lady Hughes, when we were discussing this in the round table about the difficulty that existed in taking this forward before.
	We are therefore making our expectations of local authorities clearer in statutory guidance. Noble Lords will be well aware that statutory guidance is not merely advice; local authorities must comply with statutory guidance unless there are exceptional reasons which justify a departure. The noble Baroness, Lady Jones, asked how we will ensure that this makes a difference, which is the crux, and which was highlighted by her noble friend in earlier discussions. We will need to monitor the impact of our revised guidance and our planned programme of work in the short and long term. The noble Baroness is right about that. It must make a difference. The revised Ofsted inspection framework includes specific wording on sibling contact and will be an area that it will look at in its inspections of children’s services. We will use its reports to highlight areas of good practice and address areas of poor practice where the need arises.
	Influenced by our discussions in Committee, we have produced a revised draft of our statutory guidance which emphasises the key points raised by noble Lords. We very much appreciate the experience that they fed in in Committee. These changes include a specific requirement for the care plan to set out arrangements for the promotion and maintenance of contact with siblings and for consideration to be given to whether staying-put arrangements may be beneficial to maintaining sibling contact when an older child leaves care. I thank the noble Baroness, Lady Jones, for her thanks to us for incorporating these points.
	We appreciate the comments from our discussion at the round table last week. They were very helpful. We appreciate that there is further work to do. We are very keen to involve noble Lords who are interested in taking this work forward in coming weeks to ensure that the guidance is as clear and robust as it can be. Clearly the noble Baroness, Lady Hughes, with her formidable experience as a former Children’s Minister, which she manifested at our discussions the other day, would be very important to that.
	We want to make sure that the changes we make to the statutory guidance as a whole encompass all the
	necessary changes and that we have had sufficient time to consult sector partners, consider our wording properly and check its consistency with our other guidance. Taking this into account, we will progress with publishing this guidance as soon as possible in the new year.
	When the guidance is published, we will work through independent reviewing officers and others to improve local practice. The revised Ofsted inspection framework includes specific wording on sibling contact, so we will monitor Ofsted reports on the impact that we are having.
	I hope that noble Lords will recognise that we share their very real concerns and will work with us to take forward practice most effectively and that therefore the noble Earl will be willing to withdraw his amendment in due course.
	Amendment 10 was tabled by the noble Baroness, Lady Young. It is on access to records for care leavers. Having considered the issue further following the debate in Committee, we recognise that we need to improve the statutory guidance in this area. We thank the noble Baroness for her involvement in this. She gave her time very generously in facilitating meetings with officials and voluntary organisations. They have been very helpful for the department as we have drafted our new guidance. We would like to thank the voluntary organisations—the Care Leavers’ Association, BAAF and Barnardo’s—which took part in the meetings, for sharing their knowledge and expertise in this area. We especially thank the noble Baroness, Lady Young, for making sure that all these groups were brought together so that we could hear the case that they needed to make.
	We would like to continue to work with them and others on finalising the revised guidance. The draft guidance is on our website, and we would welcome comments from noble Lords and others over the coming weeks. The revised guidance will emphasise the importance of good record keeping and the values and principles that should apply when supporting people in accessing their records. I assure the noble Baroness, Lady Young, and my noble friend Lady Hamwee that this will apply to supporting care leavers of all ages. They made that point very cogently.
	I know that the noble Baroness, Lady Young, is keen to ensure that the revised guidance, when finalised, is properly implemented, and we will make sure that those working in the sector are aware of it. As well as placing the guidance on our website, we will work closely with the National Care Advisory Service, which facilitates the National Leaving Care Benchmarking Forum of care leaver managers. I assure the noble Baroness, Lady Young, that we will also work with care leaver managers, independent reviewing officers and children in care councils to raise the priority given by local authorities to this issue.
	In addition, in order to help embed the guidance in practice, we will participate in a round table with local authorities and the sector to discuss good practice on this subject, as the noble Baroness, Lady Young, suggested. We will also monitor what Ofsted inspection reports say about local practice on this important issue. I
	again express our appreciation to the noble Baroness, Lady Young. We hope she will continue to work with us and that she will not move her amendment in due course.
	I hope that I have reassured noble Lords of our commitment to improving support for children in care and care leavers and that they will welcome our commitments to improve statutory guidance on sibling contact and care leavers’ access to records. I urge the noble Earl to withdraw his amendment.

The Earl of Listowel: My Lords, I thank the Minister for her careful reply. It was encouraging to hear what she said about interim care orders and about treating all children similarly, notwithstanding their legal status. I am grateful for the opportunity to meet her and officials to discuss this matter.
	I have great faith in the Department for Education as it deals with these matters. I have worked in this House for 15 years, and to my mind the current ministerial team and the way it works is remarkably effective, so I have faith that things will soon begin to improve for these children. Of course, we will need to watch very carefully that this happens. I am most grateful to my noble friend Lady Howe, the noble Baroness, Lady Tyler, and other noble Lords for their support of this amendment. The noble Baroness, Lady Tyler, is the chair of the Children and Family Court Advisory and Support Service, and she would perhaps save considerably on its expenditure if we could get this right and children were not moving in and out of care, as happens now. There is a real cost argument as well as a child welfare argument here.
	I remind noble Lords of the work of Delma Hughes, a care leaver who was separated from her five siblings, who has spent her life providing therapeutic work to vulnerable young people. She has set up a charity, Siblings Together, which enables young people who are separated in care to spend holidays together. I was very pleased to see in the draft statutory guidance that attention was drawn to the need to allow young people to have the benefit of such facilities. I am most grateful to the Minister for her reply and I beg leave to withdraw the amendment.
	Amendment 7 withdrawn.
	Amendment 8 not moved.
	Clause 7: Contact: children in care of local authorities
	Amendment 9 not moved.
	Amendment 10 not moved.
	Clause 9: Promotion of educational achievement of children looked after by local authorities
	Amendment 11
	 Moved by Lord Nash
	11: Clause 9, transpose Clause 9 to after Clause 80

Lord Nash: My Lords, the small government amendment I have tabled will move Clause 9 from Part 1 of the Bill to the new Part 5, which is about the welfare of children. This will mean that the provision will be in the same part as other clauses that relate to looked-after children.
	Before the noble and learned Baroness speaks to her amendment, it might assist the House if I confirm the Government’s position on enabling young people to remain with their former foster carers, commonly referred to as “staying put” arrangements. Last week, we announced our intention to propose an amendment to the Bill at Third Reading to place a new duty on local authorities to support every care leaver who wants to stay with their former foster parents until their 21st birthday.
	I am fully conscious that many noble Lords have dedicated their life to public service, whereas I am a relative newcomer to this. Indeed, up until 10 years ago I spent my life in business focused, frankly, on money. However, about 10 years ago some philanthropic juices started to flow—better late than never you might think—which was initially sparked by two events which happened, as so often serendipitously occurs, in close proximity to each other that made a profound impact on me. First, I visited an organisation which was involved in looking after children in care who were particularly challenged and had fallen out of many other placements or, as the noble Earl, Lord Listowel, described it, had experienced a revolving door of care. This organisation provided intensive care for these children. I remember when visiting them being struck by how intensive this support was.
	Shortly thereafter I visited the charity Amber, which looks after young people, many of whom have been in care and many of whom some years after leaving care have become homeless or been in prison. Amber takes these young people for an intensive residential course to rehabilitate them into society, teach them how to apply for a job, be interviewed, how to dress and show manners et cetera. The charity has a very high success rate of getting them into jobs permanently. When visiting this charity and talking to the young people, I was struck by the contrast between the often very good care that they spoke about receiving—not always but often it was very good care—and how, when they became adults, society seemed to drop them like a hot brick. Following this, I spent some considerable time understanding the plight of children leaving care, and I am delighted to say that we have moved a long way since then, thanks to the very good efforts of the previous Government and this Government.
	Therefore, when the noble Earl, Lord Listowel, first started to talk about staying-put arrangements he was, as far as I was concerned, pushing against if not an open door at least one that was off the latch on well-oiled hinges. I discussed the matter with my honourable friend the Minister for Children and Families who—as the noble Baroness, Lady Northover, said, I am delighted to see is in the House—particularly following the latest disappointing figures from the staying-put pilots, had absolutely no hesitation in feeling that this was something we should do. We then spoke to my right honourable friend the Secretary of State for Education, who agreed to it in a heartbeat. Therefore I am delighted to bring forward the amendment today.
	I know that many from across both Houses share our commitment to doing better for these most vulnerable young people, but I would like to take this opportunity to pay tribute particularly to the noble Earl, Lord
	Listowel, for his commitment to increasing and improving the support available to care leavers. The way he presented the case for this new duty during our debates and in our meetings shows that he is a powerful advocate for this group of vulnerable young people. Indeed, I would like to thank the many noble Lords who spoke on this issue in Grand Committee.
	Over recent years, I think we have all come to realise that young people often are not ready to leave home at 18. We rarely expect our own children to do so, so why on earth should we treat those in care differently? This issue has moved up the agenda, from the work started by the previous Government, including by the noble Baroness, Lady Hughes, to the significant step forward that we will make in the Bill. I pay tribute to the noble Baroness, Lady Hughes, for initiating the pilots, which have so informed our thinking on this matter.
	My honourable friend the Minister for Children and Families has made improving support for looked-after children and care leavers one of his main priorities since joining Parliament—initially as chair of the All-Party Parliamentary Group for Looked-After Children and Care Leavers and now as a Minister. From last autumn, he has led a drive to promote staying put and to encourage local authorities to make this more widely available. As he said in the other place, we wanted to wait for this year’s figures to see what progress had been made. At Grand Committee, those figures had just been released and the increase was minimal. I explained our disappointment that they had not increased as much or as quickly as we hoped.
	I would like to thank the sector, particularly the Fostering Network, for its work with officials on the evidence base which has so informed our decision. The new duty will come into force from April 2014. We will be giving local authorities £40 million over the next three years to put the support arrangements in place.
	When we made the announcement on introducing this new duty, a number of voluntary organisations immediately supported the move. I will quote two of those. Janet Rich of the Care Leavers Foundation said:
	“Step by step this Government has demonstrated that it truly understands the difficulties which face care leavers as they set out on the journey towards adulthood. Today’s announcement is another positive step on the journey towards State-as-parent acknowledging the duty they owe to this uniquely vulnerable group of young adults”.
	Natasha Finlayson of the Who Cares? Trust said:
	“This is absolutely fantastic news for thousands of young people in foster care, giving them vital security and support at a crucial time in their lives. It represents the most significant reform to the support children in care are given in a generation”.
	I hope that noble Lords will welcome the significant change that we are proposing for care leavers. This will allow them to leave stable and secure homes when they are ready and able to make the transition to independence. I beg to move the government amendment, which moves Clause 9 to Part 5 of the Bill.

The Earl of Listowel: My Lords, perhaps I should rise. I was so focused on the previous amendment that I had rather missed that this was coming here. I apologise most sincerely for that, but I thank the Minister for his words.
	Sorry, am I talking completely out of place?

Baroness Hughes of Stretford: My Lords, I ask for guidance as to whether we can now speak on Amendment 12, which the business paper incorrectly describes as “g12”—a government amendment. I think it is confusing people.

Lord Haskel: There is an error on the paper. The government amendment is number 11 and the amendment of the noble and learned Baroness, Lady Butler-Sloss, is number 12. The two are grouped together, so the noble and learned Baroness, Lady Butler-Sloss, may speak to her amendment.

Baroness Butler-Sloss: My Lords, I was completely confused. There was a moment when I thought I was getting out of control because I know this is not so far a government amendment.
	I start by expressing my own gratitude to the Government for the way they have approached care leaders, from the Secretary of State downwards to the Ministers standing over there and sitting here. We on our side are enormously grateful for the fact that the plight of care leavers has been recognised and, I cannot resist adding, the particular plight of the trafficked children who at the age of 18 were possibly going to be in a very parlous state.
	I do not know if I am in the loop, and of course as a Cross-Bencher I do not hear what happens in the usual channels, but I get the impression—I hope I am right—that the Minister proposes to bring forward an amendment at Third Reading that would bear some resemblance to the current Amendment 12. If that is so, I am absolutely delighted. I very much look forward to seeing what that amendment will be, what it contains, and whether it contains what the noble Baronesses and I, who put our names to this amendment, would hope to find there. However, for the moment, if that is what the Minister is going to do, it would be a total waste of your Lordships’ time for me to say anything more about Amendment 12.

Baroness Hughes of Stretford: My Lords, before the noble Earl, Lord Listowel, rises, I will say one or two words and not delay the House. The Government have recognised how dear this issue is to the hearts of so many noble Lords, including to myself. I am very pleased that they will bring forward an amendment at Third Reading. I wanted in particular to congratulate the noble Earl, Lord Listowel, and the noble and learned Baroness, Lady Butler-Sloss, who have both led the charge on this.
	As the Minister said, the pilots were initiated by the previous Labour Government, and we would certainly have extended the provision across the country had we been able to and had the general election not intervened. I will not rehearse the benefits that the pilots have identified, but they are significant. However, despite those benefits, as the Minister said, figures show that depending on local authorities voluntarily to move in this direction and enable young people to stay put is not working.
	I reiterate what the noble and learned Baroness, Lady Butler-Sloss, said. While the Minister has today given us some reassurance about the terms of the amendment that they will bring forward, we need to see it as soon as possible. The amendment that has been tabled envisages continuation of accommodation for young people up to the age of 21 unless there are very specific practical reasons why that is not practicable. In other words, the amendment that has been tabled would move the centre of gravity on this issue and make it much more the norm that a young person in care would stay with foster parents rather than not. That is what we would like to see in the government amendments. Can the Minister give us an assurance that the amendment will be published in good time so that we can consider it?

The Earl of Listowel: My Lords, I am most grateful to the Minister for informing us of the Government’s proposal to bring forward their own amendment at Third Reading to introduce the staying-put amendment. I was very grateful to him for his preparedness to listen. Our first meeting had to be postponed because of family illness, but he was very prepared for us to meet again to discuss this, he listened carefully to concerns and we met on subsequent occasions. I was most encouraged by his attention and his responsiveness to my concerns and to those raised by other noble Lords.
	I was also very moved in Grand Committee by the strong support from all around the House, from so many noble Lords who are parents and grandparents, who recognised that they look after their own children until the age of 25 or 30. The average age of a child who leaves home is 24 or more. However, many young people who leave care move out at age 16, 17 or 18. I am so grateful to all your Lordships that this change has come about.
	In the evaluation that was done on this following the pilots in the 10 local authorities that the noble Baroness set up under the previous Government, 24% of young people stayed put. Those who stayed put with their foster carers towards the age of 21 were twice as likely to be in education and more likely to be at university. Those who did not benefit from staying put, who did not stay with their foster carers, were more likely to have multiple changes in habitation immediately after leaving care and to have far poorer outcomes. As Natasha Finlayson, chief executive of the Who Cares? Trust, said, this is a huge change in the lives of many young people leaving care—one of the biggest changes we have seen in many years. It is very much to be welcomed.
	I want to raise one issue at some point with the Minister, which Natasha Finlayson raised in her comments, on dealing with children in children’s homes. They would not be touched by the legislation as it stands, and I understand that it would be a considerable extra cost to allow young people to stay in their children’s homes past age 18. However, it has been suggested that there might be a method of connecting young people in residential care with foster carers towards the end of or early on in their stay in residential care so that, if they chose, they could move on to a fostering arrangement as they moved towards the ages of 18, 19 and 20. I hope that the Government
	might look at that. Perhaps that is something for guidance rather than statute, and therefore perhaps not for the amendment the Government will bring forward at Third Reading. However, I hope that they will consider it.
	I am particularly grateful to the Secretary of State who, at a time of serious austerity, was prepared to come forward with £40 million to enable this to happen. I very much wanted that to be achieved, but felt some concern for the directors of children’s services, who would have to make some very difficult choices in the short term to make this possible. As regards this matter I am therefore extremely grateful for the actions of the Minister, to the Minister for Children and Families, and to the Secretary of State.

Lord Nash: My Lords, I can confirm that we will lay an amendment at Third Reading and that we will produce it in good time before that. We did not lay it today as we wanted to get the wording right. We want not only to ensure that the wording is legally correct but also that there is a consensus around it, both in Parliament and in local government and the sector. We will take account of all the comments made by noble Lords as we develop the amendment and start to work on statutory guidance. We will be consulting with interested Peers, local government and key voluntary sector organisations over the next few weeks on the wording of the proposed amendment. Officials will be happy to arrange a meeting with noble Lords to discuss the detail of the amendment.
	The noble Earl, Lord Listowel, commented on care leavers who leave residential care. In general, as noble Lords will know, children’s homes do not seek to provide a permanent “family-type” placement, and few placements in homes last very long. However, there is nothing to stop local authorities from providing staying-put arrangements. However, our proposed duty will only apply to care leavers who leave foster care placements. As the noble Earl said, it is a great deal more difficult and expensive to provide staying-put arrangements in children’s homes. You would have vulnerable adults in homes with much younger vulnerable children. However, we are supporting Catch22 with a grant of £200,000 over two years to help improve support and outcomes for young people who leave residential care. The project is working with six providers in the north-west of England and learning will be disseminated nationally. I will be very happy to discuss that project with the noble Earl in more detail.
	I hope that our decision to table an amendment on staying put at Third Reading will reassure noble Lords that we are committed to introducing legislation in the Bill on this issue. I therefore urge the noble Baronesses to withdraw their amendment and I beg to move the minor government amendment that would transpose Clause 9.
	Amendment 11 agreed.
	Amendment 12 not moved.
	Amendment 13
	 Moved by Lord McColl of Dulwich
	13: After Clause 9, insert the following new Clause—
	“Child trafficking guardians for children who may have been victims of human trafficking
	After section 26A of the Children Act 1989 insert—
	“26B Child trafficking guardians for children who may have been victims of human trafficking
	(1) A child trafficking guardian shall be appointed to represent the best interests of each child who might be a victim of trafficking in human beings if the person who has parental responsibility for the child fulfils any of the conditions set out in subsection (3).
	(2) The child trafficking guardian shall have the following responsibilities to—
	(a) advocate that all decisions relating to the child are made in the child’s best interest and, where reasonably practicable and consistent with the child’s welfare after ascertaining the child’s wishes and feelings in relation to those decisions;
	(b) advocate for the child to receive appropriate care, safe accommodation, medical treatment, including psychological assistance, education, translation and interpretation services;
	(c) assist the child to access legal and other representation where necessary, including, where appropriate, to appoint and instruct the solicitor representing the child on all matters relevant to the interests of the child;
	(d) consult, advise and inform the child victim of the child’s legal rights;
	(e) keep the child informed of all relevant immigration, criminal or compensation proceedings;
	(f) contribute to identification of a plan to safeguard and promote the long-term welfare of the child based on an individual assessment of that child’s best interests;
	(g) provide a link between the child and various organisations who may provide services to the child;
	(h) assist in establishing contact with the child’s family, where the child so wishes and it is in the child’s best interests;
	(i) where appropriate liaise with an immigration officer handling the child’s case in conjunction with the child’s legal representative;
	(j) accompany the child to all police interviews; and
	(k) accompany the child whenever the child moves to new accommodation.
	(3) Subsection (1) shall apply if the person who has parental responsibility for the child—
	(a) is suspected of taking part in the trafficking of human beings;
	(b) has another conflict of interest with the child;
	(c) is not in contact with the child;
	(d) is in a country outside the United Kingdom; or
	(e) is a local authority.
	(4) In subsection (1), a child trafficking guardian may be—
	(a) an employee of a statutory body;
	(b) an employee of a recognised charitable organisation; or
	(c) a volunteer for a recognised charitable organisation.
	(5) A person discharging duties as a child trafficking guardian shall not discharge any other statutory duties in relation to a child for whom they are providing assistance under this section.
	(6) Where a child trafficking guardian is appointed under subsection (1), the authority of the child trafficking guardian in relation to the child shall be recognised by any relevant body.
	(7) In subsection (6), a “relevant body” means a person or organisation—
	(a) which provides services to the child;
	(b) to which a child makes an application for services; or
	(c) to which the child needs access in relation to being a victim.
	(8) The appropriate national authority—
	(a) shall by order set out the arrangements for the appointment of a child trafficking guardian as soon as possible after a child is identified as a potential victim of trafficking in human beings;
	(b) shall by order set out requirements for the training courses to be completed before a person may discharge duties as a child trafficking guardian;
	(c) shall by order set out the arrangements for the supervision of persons discharging duties as a child trafficking guardian;
	(d) shall by order set out the arrangements for the provision of support services for persons discharging duties as a child trafficking guardian; and
	(e) shall by order designate organisations as a “recognised charitable organisation” for the purpose of this section.
	(9) A person’s appointment as a child trafficking guardian for a particular child under this section shall come to an end if—
	(a) the child reaches the age of 18; or
	(b) a durable solution for the child has been found based on an individual assessment of the best interests of the child.
	(10) In this section, a child is considered to be a “potential victim of trafficking in human beings” when a referral has been made to a competent authority for a determination under the identification process required by Article 10 of the Trafficking Convention (Identification of Victims) and there has not been a conclusive determination that the individual is not such a victim.
	(11) For the purposes of subsection (10), there is a conclusive determination that an individual is not a victim of trafficking in human beings when, on completion of the identification process required by Article 10 of the Trafficking Convention, a competent authority concludes that the individual is or is not such a victim.
	(12) In this section—
	“parental responsibility” has the same meaning as section 3 of this Act;
	“competent authority” means a person who is a competent authority of the United Kingdom for the purposes of the Trafficking Convention;
	“the Trafficking Convention” means the Council of Europe Convention on Action against Trafficking in Human Beings (done at Warsaw on 16 May 2005);
	“trafficking in human beings” has the same meaning as in the Trafficking Convention.””

Lord McColl of Dulwich: My Lords, I will begin with the story of a boy from Vietnam whose parents needed to borrow money for essential medical treatment. They were later forced to hand over their son to the gang that had loaned them the money. He was brought to the UK and forced to cultivate cannabis to work off the debt to the criminal gang that had brought him here. I will also tell the story of the girl from Nigeria who was told that she was being brought to the UK to go to school and receive an education. Instead, she was forced to do work around the house where she was held captive. Her passport was taken from her, she was not allowed to leave the house, and she was even made to eat separately from the rest of the household. Not only was she used as a domestic slave and violently beaten, but she was sexually abused by the man of the house and by his friend, became pregnant and was forced to have an abortion.
	These are just two of very many stories. Over 500 children and young people believed to be victims of human trafficking were identified in the UK Human Trafficking Centre’s A Strategic Assessment on the Nature and Scale of Human Trafficking in 2012. It is with these children in mind that I move Amendment 13 today.
	On 15 February 2012, we discussed a similar amendment during the debate on the Protection of Freedoms Bill. Your Lordships might ask why I am returning to this now. When I moved Amendment 57A of the Protection of Freedoms Bill on Report there was considerable support for it among your Lordships but the Government pressed us not to divide, offering to commission research to evaluate the current arrangements for the care of trafficked children. In the light of these assurances I agreed not to divide. I tabled an amendment to this Bill in Committee and move Amendment 13 today because the evidence produced by the very research commissioned as a result our first intervention compels us to do so.
	The research commissioned by the Home Office following that debate was undertaken by the Children’s Society and the Refugee Council and the resulting report, Still at Risk, was published on 12 September this year. The report demonstrates that what was said during the debate on the Protection of Freedoms Bill in 2012 about the inadequacy of the care was true and remains true today. It echoes the call we made then and make again today for the provision of an independent trusted adult who will work to ensure that each child victim is able to understand their rights, has their voice heard in decisions that affect them and is supported effectively through the different legal processes in which they are engaged. Amendment 13 calls that role a “child trafficking guardian”.
	I will first restate the arguments for child trafficking guardians, as I set out in February 2012, and then consider the findings of Still at Risk. Before I do so, I want to be really clear about the rationale for the child trafficking guardian as set out in Amendment 13. Sometimes we can get into a bit of a muddle when considering the appointment of guardians, thinking that they conduct a role that an existing body or agency should conduct. If the guardian proposal is seen in this way, arguments in favour of it are inevitably seen as a criticism of existing agencies. This, however, is to misunderstand fundamentally the role of child trafficking guardians, which is different from that of any existing actor or agency.
	The child trafficking guardian model is based on the UNICEF guidelines and international best practice because the problems that child victims of trafficking experience have remarkable similarities from country to country. Rescued victims are children in a foreign country who have to engage with multiple state agencies such as the courts, the police, local government, education and so on. In each agency they have to deal with a different set of people. They have to retell their painful story again and again. This is disorientating and distressing for the children and in this context of being passed from pillar to post children become alienated and particularly vulnerable to retrafficking.
	This is not a distinctly British problem. It is a problem of being a trafficked child in a foreign country and having to engage with different state agencies. The child trafficking guardian solution provides an entirely new role that no existing agency provides. It does two things. First, the child trafficking guardian, while regulated by law, is independent from those state agencies that make decisions about the child’s immigration status or which finance a child’s care. Trafficked children are
	invariably afraid and tend to distrust authority figures representing the state. A child trafficking guardian can speak to and for the child without any other conflicting interest. Secondly, the child trafficking guardian is not a new level of bureaucracy with which a rescued trafficked child must engage to be processed by the state in addition to the police, courts, local government and so on. Rather, their role is to be a constant in an ever changing world and to accompany the rescued trafficked child as they relate to all the different state agencies. To enable the child trafficking guardian to do this, they have legal recognition so that all the agencies are obliged to recognise them, allowing them to accompany the child. They also have the right to speak on behalf of the child if the child requests it so that the child does not have to repeat their painful stories again and again if they do not want to.
	Having established the rationale for child trafficking guardians, I now turn to the problem I highlighted in February 2012, which child trafficking guardians are designed to address, and the findings of the resultant research. I argued that we badly needed to make provision for child trafficking guardians because of the extraordinarily large number of rescued trafficked children who were being lost from local authority care—301 out of 942 trafficked children looked after between 2005 and 2010. I pointed out that this national disgrace was hardly surprising given that our child trafficking provisions did not and do not comply with the international best practice set out by UNICEF. I also examined each provision in the Children Act that the Government have argued has the effect of providing a child trafficking guardian function, explaining why it does not provide this function and I will briefly recap, explaining why this is still very much the case.
	First, independent advocates appointed under Section 26 of the Children Act act only on the child’s behalf in relation to the care that a child receives from a local authority. Quite apart from the obvious and immediate problem that Section 26 advocates do not engage with a child’s interaction with any other state agencies, a child is not appointed an advocate from the moment they are identified as possibly being a trafficked child, which is key requirement of the EU anti-trafficking directive. The advocate is appointed only if the child wishes to avail themselves of this opportunity. Moreover, there is currently no guarantee that the advocate provided for a trafficked child who requests one would have any knowledge or understanding of human trafficking, even with the proposed new statutory guidance. Secondly, independent visitors can be offered if a local authority considers a child would benefit from such support but this is simply a befriending role. Thirdly, independent reviewing officers do not accompany or support the child in their interactions with all state agencies. They meet them only to talk about their care plan.
	When I made the same points in Grand Committee the Minister referred to each of these roles without addressing my arguments that none of them amounts to the provision of a child trafficking guardian. However, she did refer to one additional role, that of the child social worker. I have already explained that the child
	trafficking guardian is a unique, separate and complementary role to that of other professionals caring for a trafficked child. It is not appropriate to expect social workers to fulfil the role of a child trafficking guardian, physically accompanying rescued children in all their interactions with the state. A child trafficking guardian alongside a trafficked child will enable social workers to provide the best support for all the children in their care.
	Having set out these arguments, I agreed to withdraw the amendment in response to the promise of research. That research, published in September, makes for deeply distressing reading. The researchers found a great variation in the quality of the care provided to trafficked children. There are examples of best practice by local authorities and caring, supportive social workers but many other children had multiple social workers or social workers who were unfamiliar with human trafficking and the risks of retrafficking, resulting in children being placed in unsuitable accommodation.
	Of very specific and direct relevance to my amendment of 15 April 2012, the research concluded that,
	“the immediate provision of intensive, one-to-one support for these children by an adult who the child can form a trusting relationship with and who could help them to make sense of the different processes and professionals that they encounter, would reduce the risk of the child going missing”.
	There can be no pleasure in being proved right when, because of the time taken to produce the report, we have lost nearly two years—two years when rescued trafficked children could have been assisted by the provision of a child trafficking guardian, but have not been. It is for this reason that I and my co-signatories have seized the first opportunity since the publication of the report to retable the version of our amendment which I commend to the House.
	Having already defined the role of child trafficking guardian, I will pick up on just two features of Amendment 13. First, the training, skills and expertise of a child trafficking guardian are extremely important. The strength of the system proposed by this amendment is in the specialist care and support that these guardians would provide. Proposed new subsection (8) of the amendment would require that guardians meet the training requirements set out by the Secretary of State and that appropriate structures for supervision of the child trafficking guardians are put in place. Secondly, in the current economic climate, the Government must rightly take into account the need to spend public money wisely and most effectively. Amendment 13 seeks to give the Government flexibility both now and in the future for how these guardianship services are provided by enabling this to be done through public sector employees or the employees or volunteers of recognisable charitable organisations as designated by the Secretary of State. Creating a new public sector agency to provide these services could be expensive, but equipping and empowering charities and volunteers to fulfil this role could be very cost effective. Some may have concerns about the role of volunteers but I have already emphasised the importance of training and supervision enshrined in the amendment. This country has a long-standing system of volunteer magistrates and well trained volunteer child trafficking guardians could provide similarly excellent support to children who have been trafficked.
	While I was, of course, grateful for the Minister’s response to this amendment in Committee, I was none the less extremely disappointed. The reasons she gave for not supporting it were exactly the same as those advanced by the Minister responding in February 2012 without in any way responding to my critique of that reasoning. It was almost as if the Still at Risk report had not been commissioned.
	I recognise that the Government are taking steps to reform social work and to improve statutory guidance for local authorities caring for trafficked children following the Still at Risk report. However, I return to the fact that this same research, which was commissioned by the Government in response to our original proposal for child trafficking guardians, has demonstrated not only the need for the various changes the Government are proposing for the guidance but also the need for a system of child trafficking guardians. For the sake of children such as those whose stories I shared earlier, we must take on board all the recommendations of the Still at Risk report.
	In conclusion, I note that in the 18 months since we first considered this issue, the Joint Committee on Human Rights, the Group of Experts on the Council of Europe convention against human trafficking and the US State Department Trafficking in Persons Report have all recommended we introduce a system of child trafficking guardians. We must not miss this opportunity. I beg to move.

Baroness Butler-Sloss: My Lords, my name is also on this amendment. This is a goal which the noble Lord, Lord McColl of Dulwich, and I have pursued for not far short of two years. If I may put it rather bluntly, we were fobbed off last time. The fobbing off produced the report to which the noble Lord referred, which only underlines the importance of bringing this amendment back in a slightly different form, as he said. In speaking to it, I declare an interest as the co-chairman of the human trafficking parliamentary group and a trustee of the Human Trafficking Foundation. I am also very much involved with Frank Field MP and John Randall MP in an inquiry into modern slavery with a view to advising government on the proposed modern slavery Bill. However, this amendment is appropriately tabled to the Children and Families Bill as it deals with children. We are talking about children and young people under the age of 18.
	The Government have produced excellent guidance on unaccompanied trafficked children and other vulnerable children and, as far as it goes, I have nothing but praise for it. However, it does not begin to meet the amendment that the noble Lord and I are putting forward. The excellent guidance presupposes that social workers and independent reviewing officers will be able to give a trafficked child what is needed to help that child from the moment of identification of the child having been a slave until the moment that that young person’s future is determined. How on earth is a social worker with a child accommodated under Section 20 of the Children Act—not even with parental responsibility—to do more than treat him or her as a looked-after child among many other looked-after children?
	Trafficked children go missing and are retrafficked. Some local authorities do not even know that a missing trafficked child has been identified as having been trafficked. Therefore, they do not alert the police to the fact that this is a particularly vulnerable child who might be picked up if immediate action is taken to try to find that child. All too often these children are treated like any other missing children, many of whom run in and out of care and are technically missing but may return after 24 hours. That is a totally different group of children.
	The statutory guidance does not provide what is needed, which is continuity, regularity, responsibility and a trusting relationship from the moment the child is identified to the moment his or her journey to whatever solution is arrived at is met. We have to bear in mind that this will generally be a foreign child, as the noble Lord, Lord McColl of Dulwich, said—I do not apologise for saying it again—because English children who are slaves are dealt with differently. The foreign child will probably speak no English and will have been brought into this country and enslaved in a wide variety of ways such as labour exploitation, prostitution or domestic servitude. Whichever method is used, the child is identified and is then known to be a victim. The child will not necessarily speak English and will not have papers. It will be difficult to work out exactly how old the child is and whether he or she is 15 or 18. Different arrangements apply according to the child’s age. The child will almost certainly be traumatised and, as the noble Lord, Lord McColl, said, frightened. He or she will have been told that they must not talk to the police, social services or to anybody else because they will put the child back on a plane or a boat and send them back to the place where people—very often the parents, as the noble Lord, Lord McColl, pointed out—have sold that child into slavery because they need the money. That is not just the case with Vietnamese children; it is across the world.
	Therefore the child is already in a very poor state and there is a danger, which is occurring, of the child being abused—I use the word “abused” deliberately—in the administrative process. This is a blot on the landscape of the United Kingdom. There is administrative abuse if the system does not adequately care for the child. What is needed is not well meaning officials who come and go—and there will not be a social worker or independent reviewing officer available all the time—but somebody on the end of a telephone, to whom the child can speak or leave a message. If that child goes missing, having been given to one of these independent people, they will then be able to get in touch with the police and say, “The child has gone missing. Please pull out all the stops to try and find the child”.
	The sort of thing you want is a constant presence for counselling, therapy, mental health issues, education, immigration and a host of other things that this traumatised child who has been rescued from slavery has to go through in our administrative process before a decision is made. What is asked for is not someone to see the child every day of the week, or probably not more than once a week or once a fortnight, but someone
	to whom the child can turn, who can ring up and find out from the foster parent or whoever, how the child is getting on; someone who the child knows will be a constant presence in this period from identification to resolution. The excellent guidance does not provide that one person.
	I know what the Government have been saying. The Minister said to us last time that what they do not want is yet another tier on top of all the other tiers. However, each of the other tiers is involved only from time to time. What we are talking about is somebody who will be constantly in the background—and in the foreground—when it is necessary. There is nobody for a child in that position at that moment and it is not good enough. To say that this is an extra tier is absolutely to misunderstand—if I may be polite about this—what is actually being asked for: not another tier, but a specific person to be there instead when that person is needed.
	There is no shortage of agencies that would be prepared to take on this role for what I suspect would be quite a modest sum, but what they must have is the statutory power to require the agencies to give them the information that is needed. They must be able to be in touch with the police, social workers or the Department of Health, because unless they have statutory power, those other agencies will not listen to them. There will be well meaning volunteers who will not make much progress. Therefore, this is absolutely crucial. Time and again we have been fobbed off. Now is the moment not to be fobbed off any more.

Baroness Royall of Blaisdon: My Lords, I was pleased and proud to add my name to this amendment. I do so having been pleased to support the noble Lord, Lord McColl, and the noble and learned Baroness, Lady Butler-Sloss, in their past attempts to deal with this gap in the way that we deal with young people who may have been trafficked. Both the noble Lord and the noble and learned Baroness have done an immense amount to improve the lives of young people who have been trafficked and changes are being made. However, as both have said today, there is still this gap.
	If we think of our own children, not having been trafficked or been the victims of slavery, but put into a similar situation in a foreign country, unable to understand the language and for whatever reason having to deal with a multiplicity of different agencies, they would not cope. Today we are talking about children who are not just vulnerable, but probably traumatised, who may have suffered degradation in some way, yet who are still supposed to deal with a multiplicity of agencies. It is deeply unfair to expect them to do so.
	This amendment would ensure that these children had one person—a constant in an ever-changing world—who they could trust and to whom they could turn whenever they felt it necessary. On the day when we have been paying tribute to Nelson Mandela, a man who was full of compassion, this is a matter of compassion and of fulfilling our obligation to these children who have suffered. Yes, as the noble and learned Baroness pointed out, these are foreign children, but that fact does not matter. These are young human beings who,
	for whatever reason, are now in this country and we have an obligation to ensure that they are properly cared for. One of the means of doing that is to ensure that they have a person there who can be their advocate and their support.
	As noble Lords have said, there are agencies, people in the voluntary and charitable sectors, who are willing and able to provide this service, and, as the noble and learned Baroness said, it is not a question of another bureaucratic tier. This is something that does not exist and needs to exist. Not only will it not cost a lot of money, in the end it could actually save money, because it means that these children will not fall through all the gaps and into crisis, as they might have done. This is a means of saving money. We have an obligation to do our best for these children and I am pleased and proud to support this amendment.

Baroness Lister of Burtersett: My Lords, the noble Lord, Lord McColl, referred to the Joint Committee on Human Rights. In Grand Committee I picked up that reference and spoke briefly about what the Joint Committee had said about the Scottish experience of guardianship, which went broader but included trafficked children. In response, the Minister expressed a degree of scepticism, perhaps, about that experience. Once again, the chair of the Joint Committee on Human Rights has followed up our debates with a letter to the noble Baroness. I shall read part of that letter. It stated:
	“I would like to draw your attention to the recommendation made by my Committee in its First Report of this Session, on the Human Rights of unaccompanied migrant children and young people in the UK, (HL: Paper 9 and HC 196), which dealt with guardianship and on which the Committee had taken evidence. This states (at paragraph 175):
	‘We welcome the findings from the Scottish Guardianship Service, which demonstrate the value that a guardian can add for unaccompanied asylum seeking and trafficked children. We recommend that the Government commission pilots in England and Wales that builds upon and adapts the model of guardianship trialled in Scotland. The guardian should provide support in relation to the asylum and immigration process, support services and future planning, help children develop wider social networks, and ensure that children's views are heard in all proceedings that affect them. The Government should evaluate the case for establishing a wider guardianship scheme throughout England and Wales once those pilot schemes are complete’”.
	The letter from the chair to the Minister continues:
	“In your contribution to the debate in the Lords you suggested that the Scottish scheme had had mixed results, that it had not 'cracked' the problems that it was intended to address, and that it would add another layer of complexity”—
	other noble Lords have talked about this—
	“ to how these things are currently handled.
	The results of the guardianship scheme, however, were largely positive, as was evidenced fully by the independent report undertaken by Professors Heaven Crawley and Ravi Kohli (who both advised my Committee during its inquiry into unaccompanied migrant children). These positive results led the Scottish Government to endorse the Guardianship Service, and support it with funding for a further three years at £200,000 per year”.
	I would add here that Aileen Campbell, the Minister for Children and Young People in the Scottish Government, has said:
	“The Scottish Guardianship Service gives asylum seeking children a voice and makes sure every young person involved understands and participates in decisions that affect them”.
	The letter goes on:
	“There is of course no question that the issues surrounding guardianship are complex and that it took time for the Service in Scotland to bed down and achieve some enduring coherence for vulnerable children in difficult circumstances. However, the independent report, in large part, is very clear that Guardianship was a safeguard for unaccompanied migrant children, and its design and implementation were exemplary”.
	The report throws some light on this question of an additional layer of complexity. It found:
	“The young people saw Guardians as helping them to understand what others did, especially when there were ‘too many people’ in their lives. This is an important perception by the young people of a key element of the Service—namely that the Service played a key role not because there were too few professionals in their lives, but because sometimes there were too many. The noise generated by these constant engagements and expectations, where young people were required to repeat some form of their story to an endless queue of professionals”—
	a point that the noble Lord, Lord McColl, made—
	“needed to be reduced to a sound that young people could hear, sometimes in sequence, and sometimes in a harmonised way. The Guardians did this”
	in a number of ways. The letter concludes:
	“My Committee believes that the Government should look at this again”.
	I really hope that the Government will look at this again. There have been some very powerful speeches in support of the amendment and I very much hope that noble Lords will not be fobbed off again.

The Lord Bishop of Truro: My Lords, I support the amendment and declare an interest as chairman of the Children’s Society. The noble Lord, Lord McColl, has already mentioned the report, Still at Risk, published jointly by the Children’s Society and the Refugee Council.
	The amendment raises an important matter. Doubts over a child’s age, their lack of documentation or uncertainty about their immigration status impede a child’s ability to access effective support to meet their welfare needs. For example, 10 of the 17 young people mentioned in the study had their ages disputed. Some had undergone multiple age assessments before it was agreed by the authorities that they were, in fact, children. Disputing a child’s age has serious safeguarding implications for them and can put them at serious risk. In the Still at Risk report, it was found that failure to recognise that they were children or victims of trafficking resulted in three of the young people who were interviewed being sent to adult prison, and two to an immigration removal centre. Several of the young people in the study did no know which country they were in because of the tight control exerted over them by their exploiters. The guidance on the United Nations Convention on the Rights of the Child states:
	“Agencies or individuals whose interests could potentially be in conflict with those of the child’s should not be eligible for guardianship”.
	The Children’s Society and others believe that local authority children’s services are indeed such agencies. A common problem for separated migrant children, including child victims of human trafficking, who may have entered the country without documents or on false papers is that their age is disputed by the Home Office and by local authorities, and that these agencies
	are unwilling to support them. Until the age of a person is verified, they should be treated as children, not adults, for the purposes of accessing support.
	The case for guardians, as set out in the amendment, is supported by many international and domestic bodies, including the UN Committee on the Rights of the Child, the Council of Europe expert group on trafficking and, most recently, the Joint Committee on Human Rights in its inquiry into unaccompanied migrant children and young people. That is supported in the long-standing position of the Refugee Children’s Consortium, a coalition of more than 40 non-governmental organisations working with children caught up in the immigration system. I urge the Minister to think carefully in the response to the amendment, which is an important initiative that is much needed by the research called for earlier.

Baroness Hamwee: My Lords, I have to say to my noble friend that in 2012 I was not entirely persuaded by a similar amendment. I made supportive comments but wondered whether it was right to be pushing it at that stage—indeed, the noble Lord did not do so. I have changed my mind. I realised that time moves on and the fact that I am not going to repeat a number of points that have been made does not mean that I do not agree with them; I agree with them very much indeed.
	It is difficult enough for trafficked adults—or, indeed, other adults who come up against the state—to deal with multiple agencies. For a traumatised child it is unbelievably more difficult. The distrust of state authorities has been mentioned and it seems that retrafficking happens because very often the trafficked child knows only his or her traffickers. They have been taught to trust the traffickers, who have said, “If there is a problem, here is the phone number. You contact us”. Of course that leads to the child leaving whatever care they are in, going back to the traffickers and being retrafficked.
	Consistency and constancy have been mentioned. I want to talk about authority, whereby a guardian has authority not just to hear but to speak for the child—to contribute to the discussions and to have to be listened to by the others who are taking part in discussions and moving towards decisions. That legal recognition is particularly important, for instance, in dealing with immigration officers who are handling a child’s asylum case, in the national referral mechanism, and in instructing a solicitor. I say that from my experience; I have not dealt with anyone who has been trafficked but as a solicitor taking instructions you have to hear the instructions from the person who is entitled to give them. I have been in this situation with clients in many different fields where I am told, “That’s what so-and-so wants”. I need to know it from that person. You cannot assume it unless the person with clear authority gives the instruction. So the statutory power, the statutory authority, and the legal status are very significant.
	Finally, I want to make a rather hard-headed point. You have to support victims and survivors of this sort of situation to enable them to be good witnesses when giving evidence. Unless we can achieve that, it will be that much harder to get convictions. My
	hard-headed point is that it is in the interests of attacking this despicable trade that I also support this amendment.

Baroness Northover: My Lords, this debate has made very clear the commitment across the House to improving the support received by trafficked children. My noble friend Lord McColl has made a very powerful case once again. We recognise that not enough has been done and that we must do more. I pay tribute to my noble friend Lord McColl, the noble and learned Baroness, Lady Butler-Sloss, and others for their determination to ensure that trafficked children, who are so very vulnerable, are properly protected. Noble Lords have made their concern extremely clear. We agree that these children are indeed among the most vulnerable and it is clear from what noble Lords and others have said that they are not being supported as they should be, so how is this best achieved?
	We remain concerned that the introduction of guardians for trafficked children, alongside those persons who should already be working in the interests of the child, is not the most effective way to tackle the local problems that are clearly manifest here. Where local systems are not working as they should be to support the best interests of trafficked children, we need to address the causes of those problems. Others with extensive experience of the needs of trafficked children agree. Children and Families Across Borders, an organisation with considerable expertise in this area, has told us that introducing guardians would not improve the inadequate service that some trafficked children receive. Instead, they believe that a clear commitment to, and strong focus on, professional development by local government employers and others is required. This would help to improve practice and ensure that social workers understand the particular needs faced by trafficked children in their care. It is not clear that appointing another individual to speak for a looked-after child or to help them navigate the care system is the answer. Central to the role of a social worker is ensuring that the child’s best interests are protected. If that is not happening then that failure should be addressed. Introducing guardians could actually result in making things worse, with other professionals thinking they do not need to concern themselves as much about a trafficked child because their guardian is looking after them.
	I note that my noble friend Lord McColl mentioned the variability of support and the best practice that can be seen among some social workers. He pointed to other cases of very poor practice and we fully agree that these must be tackled. We recognise that local authority performance with regard to trafficked children is clearly inconsistent. To address this inconsistency, we have proposed new regulations so that, when a trafficked child comes into the care system, the crucial information that they have been trafficked must be recorded on care plans. Under these new regulations, local authorities would be required, in planning and reviewing care for a trafficked child, to consider the specific and complex needs that may result from the experience of having been trafficked. This requirement would also extend to pathway planning for a trafficked child when they cease to be looked after. Social workers
	should support trafficked children to access mainstream and specialist services and this should include accompanying them to meetings with other professionals, as my noble friend Lord McColl highlighted. We will make this clear in the proposed new statutory guidance. To underpin the proposed new regulations regarding trafficked children, we have, as I say, drafted new statutory guidance. This sets out our expectations of how local authorities should go about providing the required support and we would welcome noble Lords’ views on how to make this draft guidance stronger. As noble Lords will be well aware, statutory guidance is of course not merely advice that local authorities can choose to ignore as they please. They must comply with statutory guidance unless there are exceptional reasons that justify a departure.
	When they first enter care, trafficked children are particularly vulnerable, as noble Lords have made clear. They might not initially recognise that they are victims of a crime, or might believe that their best interests lie with their traffickers. The first hours and days are crucial in protecting a trafficked child from going missing. The new statutory guidance describes some of the steps that local authorities should take to protect against this risk, such as temporarily removing their phones to ensure that they are not in contact with those who can do them harm, providing 24-hour supervision, or employing previously trafficked children to assure the victim that they are safest in local authority care. The guidance provides a clear definition of a trafficked child and describes steps that should be taken when a child is identified as having been trafficked. This vital role is one that local authorities, with partners including the Home Office and police, fulfil—or should fulfil—as part of their child protection duties.
	The noble and learned Baroness, Lady Butler-Sloss, talked about missing children. Some of the things that I have just said are intended to try to stop those children going missing. However, we have also put specific advice in our revised guidance on trafficked children, including how to prevent them going missing and how to support them when they are found.
	Children who have been trafficked into this country from overseas may require specialist support in dealing with immigration questions or proceedings, as noble Lords have made plain. The amendment says that guardians will assist the child to access legal representation, appointing and instructing a solicitor where necessary, and my noble friend Lady Hamwee picked up the issue of legal representation. However, independent reviewing officers should already ensure that any child in their care has access to the appropriate legal support. In our new statutory guidance, we will now go further and require that such support should be provided by a suitably qualified solicitor or immigration adviser. Any immigration advice or legal support would be in addition to the child’s right, as a looked-after child, to independent advocacy.
	Part of making children feel safe when they have been trafficked from overseas is ensuring that they understand their situation and the support provided to them. Our new statutory guidance will require that, where interpreters are required, they should be trained to understand the particular risks faced by trafficked children. Helping children to overcome cultural or
	language barriers so that they can express their wishes and feelings is a role that is already carried out by independent advocates. The new statutory guidance notes the importance of commissioning specialist advocacy services to provide this support.
	The noble Baroness, Lady Lister, brought up the discussion that we had in Committee about Scotland. I was very interested in the fact that Scotland has guardians, and that is why I asked how it had worked out. She probably knows that the Scottish guardianship system is much smaller than would be required in England because it covers just 80 unaccompanied asylum-seeking children. Scottish guardians essentially fulfil the role played by independent advocates in the English system but with specialist immigration skills. Our proposed statutory guidance requires that, where a trafficked child requires specialist immigration advice, it should, as I said, be provided by a solicitor or adviser with the relevant competences.
	I thank the JCHR for its letter, to which I shall be responding, and for its engagement in this matter. It highlighted several aspects of the Scottish model for consideration in England, as the noble Baroness noted, including provision of support in relation to the asylum and immigration process, support services and future planning, helping children to develop wider social networks, and ensuring that children’s views are heard in all proceedings that affect them. These are, indeed, very important, and that is why each of them is addressed in our new guidance. It is also why, where local practice is good, those aspects are already provided through the existing care system without recourse to the additional role of guardian for trafficked children. Of course, we take very seriously the letter that the JCHR has written and, as I said, I shall be writing in response.
	There was quite an emphasis in Committee and, to some extent, in the discussions this evening on stability of care. We agree that these children need stability and continuity. The new statutory guidance would require local authorities to prioritise trafficked children so as to provide the greatest likelihood of their building a sustained relationship with their social worker. These are the most vulnerable children and they are precisely those for whom social workers must do most in providing understanding and support.
	I have described here only a portion of our proposed new guidance, which covers a range of issues to ensure that trafficked children receive the right care and support. We would welcome suggestions from noble Lords on whether the guidance should include other issues. It is hugely important that we get the support for these children right, and we very much look forward to continuing discussions with noble Lords about how best to do that. We recently sent both the draft regulations and the guidance to noble Lords and they are available on our website. In particular, we would like to discuss with my noble friend Lord McColl, and with any other noble Lord who might wish to join in, the opportunities offered by the regulations. I am delighted that we have in the diary a meeting with my noble friend Lord McColl later this week. Our discussions are clearly very important for this group of children.
	When officials shared the drafts of the guidance with representatives of the Children’s Society, the Refugee Council, and Children and Families Across Borders,
	they all found much to welcome in the guidance. I hope that noble Lords will find the same when they read the drafts and that they provide a sound basis for further discussion when we meet shortly. I therefore hope that my noble friend will be willing to withdraw his amendment.

Baroness Butler-Sloss: I wonder if I could ask the noble Baroness what she meant by regulations. She has been talking about statutory guidance, but she also said regulations. Does she mean statutory instruments?

Baroness Northover: From authorities far higher than me, the answer seems to be yes—regulations.

Baroness Royall of Blaisdon: Could the noble Baroness also confirm that discussions or consultations about the guidance have taken place with Children and Families Across Borders, because I understand that they were not terribly happy about the discussions that they had been having with the Government on this issue, and that as an organisation they have been passed from pillar to post? I would like confirmation that they have been properly consulted on their views.

Baroness Northover: My understanding is that they have indeed been consulted, and that consultation will no doubt continue, because it is extremely important that we get this right. The noble Baroness is right to highlight it. I will of course look into this further, and if they have got concerns we invite them to engage with us, because all of us want to get this right.

Lord McColl of Dulwich: My Lords, I thank everyone who has taken part in this debate, especially the noble and learned Baroness, Lady Butler-Sloss, and everyone else who has been working on this subject. I am afraid the response is very disappointing indeed, and it does very little to help these poor trafficked children. The guidance does not provide for a child trafficking guardian, and I would therefore like to test the opinion of the House.

Division on Amendment 13
	Contents 130; Not-Contents 145.
	Amendment 13 disagreed.

Baroness Northover: My Lords, we are looking forward to discussing this further with my noble friend Lord McColl and with other noble Lords.
	Consideration on Report adjourned.

Financial Services (Banking Reform) Bill
	 — 
	Third Reading

Clause 8: Independent review of operation of legislation relating to ring-fencing
	Amendment 1
	 Moved by Lord Deighton
	1: Clause 8, page 24, line 23, leave out “4” and insert “2”

Lord Deighton: My Lords, this amendment brings forward the timetable of the independent review to be held of ring-fencing. As the House will recall, the Government previously amended the Bill to provide for an independent review of ring-fencing, once the
	ring-fence has come into force. Following the recommendation of the Parliamentary Commission on Banking Standards, our original amendment provided that the review be conducted no later than four years after the ring-fence had come into effect. This was to allow the ring-fence time to bed down before being reviewed.
	The Government have, however, listened to arguments from the Opposition that the review should be held sooner. Two years is a long enough period over which to observe the operation of the ring-fence, and assess its effects. The knowledge that ring-fencing will soon be reviewed may also be a further encouragement to banks to comply faithfully with the ring-fence.
	This amendment therefore requires that the independent review of the ring-fence be held within two years of the ring-fencing taking effect, rather than four years. This is a sensible change and one that we hope illustrates the Government’s constructive approach to reasonable suggestions from all sides.

Lord Eatwell: My Lords, everyone in the House has from time to time expressed the view that this is a great experiment. We are not quite sure how the ring-fence will work and therefore it is appropriate that that it be monitored promptly and on a regular basis. I think this is a very sensible amendment—I would do, since I moved a version of it earlier—and I urge the House to support the Government.

Lord Lawson of Blaby: My Lords, I thank my noble friend Lord Deighton for putting forward this amendment. As he said, it is something which the banking commission, of which I had the honour to be a member, has been calling for. It is extremely welcome and it is very good that he has acceded to it. As the noble Lord, Lord Eatwell, said, the whole idea of ring-fencing is something of an experiment. We do not know whether it is going to work and therefore it is necessary that after an appropriate time it should be thoroughly investigated to see whether it is working satisfactorily and, if it is not, to have a move to full separation.
	We know for certain that full separation works; indeed, separation was the norm in this country for most of our lifetimes. It is only during the past 25 years that there has not been separation. In the old days, there were the so-called joint stock banks, which were to do with the commercial banks and did retail lending and lending to small businesses, which are now known as SMEs, and there was a completely different group called the merchant banks, which were different people and institutions. For a long time, most of them were partnerships and had a different set-up altogether. They did what is now known as investment banking and it worked extremely well. We know that separation can work but we do not know whether this idea can work, so it is right that there should be a review.
	While commending the Government, and in particular my noble friend, for introducing this, I hope that it will not be necessary. That is not because the ring-fence will, as it were, be found to work. I have grave doubts about that if it persists. However, there must be considerable doubt as to whether it will persist. Some noble Lords may have seen the interesting report in
	today’s
	Financial Times
	that the HSBC is thinking seriously of spinning off its UK retail and commercial banking enterprise as a separate company, with outside shareholders taking up to 30% in it. That is according to the
	Financial Times
	; we do not know, but there is a good reason for that. If the requirements of the ring-fence are really to be enforced toughly, they will make it so difficult, complicated, burdensome and onerous that many banks should, if they are rational, ask, “Is it actually worth staying together? Might it not be better for us”—the management—“and for our shareholders to separate and release increased shareholder value for that purpose?”. I hope that the institutional shareholders will also keep the banks up to the mark. That would be the happiest conclusion—that we will not even need the review because separation will happen of its own accord. However, just in case it does not we will need the review and I am grateful to my noble friend.

Lord Turnbull: My Lords, we should welcome this shortening of the period, particularly when one remembers that the clock for the new period does not start ticking until the transition to ring-fencing is complete—and that is a date in 2019. If we are adding four years to that, it will be 2023 before this review takes place; so even bringing it back to 2021 is to be welcomed.
	Amendment 1 agreed.
	Amendment 2
	 Moved by Lord Deighton
	2: After Clause 8, insert the following new Clause—
	“PRA review of proprietary trading
	(1) The PRA must carry out a review of proprietary trading engaged in (whether or not as a regulated activity) by relevant authorised persons, for the purpose of considering whether further restrictions on any kind of proprietary trading ought to be imposed.
	(2) The review must begin before the end of the 12 months beginning with the first day on which section 142G of FSMA 2000 is fully in force.
	(3) On completion of the review, the PRA must make a written report to the Treasury on—
	(a) the extent to which relevant authorised persons engage in proprietary trading;
	(b) whether proprietary trading engaged in by relevant authorised persons gives rise to any risks to their safety and soundness;
	(c) whether any kinds of proprietary trading are particularly likely to give rise to such risks;
	(d) anything done by the PRA to minimise risks to the safety and soundness of relevant authorised persons arising from proprietary trading engaged in by them;
	(e) any difficulties encountered by the PRA in seeking to minimise such risks.
	(4) The report must include an assessment by the PRA of each of the following—
	(a) whether the PRA’s powers under FSMA 2000 are, and might be expected to continue to be, sufficient to enable it to advance its objectives in relation to relevant authorised persons who engage in proprietary trading;
	(b) the effectiveness of restrictions imposed in countries or territories outside the United Kingdom on proprietary trading by banks (so far as experience in those countries or territories appears to the PRA to be of relevance to the United Kingdom).
	(5) The report must be made within 9 months of the beginning of the review.
	(6) The Treasury must lay a copy of the report before Parliament.
	(7) The PRA must publish the report in such manner as it thinks fit.
	(8) The functions of the PRA under this section are to be taken for the purposes of FSMA 2000 to be functions under that Act.
	(9) This section is to be read with the interpretative provisions in section (Reviews of proprietary trading: interpretation).”

Lord Deighton: My Lords, these amendments require the PRA to review proprietary trading by UK banks and PRA-regulated investment companies and prepare a report to the Treasury. That will be followed by an independent review of the issue. The PRA must consider in its report the extent to which regulated firms engage in proprietary trading. It will then have to assess whether that risks their safety and soundness.
	As the Parliamentary Commission on Banking Standards showed, proprietary trading can take many forms. That is why we are requiring the PRA to look into what particular risks different forms of proprietary trading can pose to the safety of the firm.
	To help to give a full picture to the Treasury and to Parliament, the PRA must also report on steps it has taken to deal with risks from proprietary trading and whether it encountered any difficulties when it tried to tackle those risks. Building on that, the PRA must then give an assessment of whether it believes the tools it has to tackle proprietary trading are appropriate, given the risks that may exist at that time and in future. It must also consider whether restrictions imposed on proprietary trading in other countries have been effective. The experience of the United States in relation to the Volcker rule, which banned proprietary trading by banks, will be particularly relevant.
	That review will take place within a year of the ring-fence coming into force. The Government have committed to ring-fencing being implemented in 2019, so this will take place in 2020. In Committee, there was some discussion about the appropriate timing of the review. The Government returned to the original PCBS recommendation, which said that the review must include,
	“an assessment of the impact of the ring-fencing rules on proprietary trading by banks”.
	To do that, the ring-fence must be in place for at least some time to consider such issues. While the ring-fence and proprietary trading are in many ways distinct issues, they will of course interact. Therefore we think it is right to allow the PRA to consider the impact of risks from proprietary trading on ring-fenced banks and whether the safeguards in place are sufficient for the particular requirements for the safety of ring-fenced banks. I know that members of the PCBS have been very concerned about that in the past, and I want to make sure that this review looks at this important area.
	Following the PRA’s report to the Treasury and to Parliament, the Treasury will set up an independent review panel. The first task for that panel will be to consider the evidence that the PRA gathered and come to a view on its findings. It will then have to make recommendations about whether future measures to deal with risks from proprietary trading are necessary.
	The independent review will be able to make any recommendations in relation to proprietary trading that it considers appropriate. It will not be constrained, and like the PRA review, will be able to consider the experience other countries have had with restrictions on proprietary trading, such as in the US with the Volcker rule. By the time of the review, I imagine that a wealth of information and views will be available to help the independent panel come to its conclusions. The independent review panel must make its recommendations in a report to the Treasury and to Parliament.
	As I have said previously, the PCBS heard in evidence that proprietary trading does not currently pose a large risk for the UK financial system, but it can do little harm to keep this area under review, should risks emerge in the future.
	As noble Lords have seen when we debated other parts of the Bill, and, indeed, through this Government’s willingness to set up and listen to the ICB in the first place, we are in favour of independent reviews. Therefore we are persuaded that proprietary trading is an area where an independent review in future can add value. These reports will give a future Parliament all the information it needs to assess whether future safeguards are necessary. I beg to move.

Lord Lawson of Blaby: My Lords, once again I would like to thank the Government and, in particular, my noble friend Lord Deighton, for moving this amendment. It is in response to a strong recommendation that was encapsulated in a specific report on this subject among the five reports from the Parliamentary Commission on Banking Standards.
	Just as in the previous amendment, which concerned the review of the ring-fence, initially the Government were prepared to look at it only from the point of view of whether an individual banking institution had been gaming the ring-fence. They have now agreed to look at the system as a whole, and I am grateful for that. Again, initially the Government said, “No way should there by a review of proprietary trading”, but they have now come round to saying, “Yes, the parliamentary commission was right and there should be a review”. I am extremely grateful to my noble friend for that. He said that there is no risk at the moment. That is because proprietary trading has, for the time being, stopped to all intents and purposes. Yet at its peak it was for many banks up to 30% of their total business. One must imagine that that is quite likely to occur again in future. I do not know whether it will but it is clearly possible. But if I might say so to my noble friend, it is not simply a question of risk—although risk is obviously an important factor.
	There was an important debate on Thursday last week on the five reports of the Parliamentary Commission on Banking Standards. Unfortunately, I was unable to attend but I read the Hansard report. It was introduced by a magisterial speech by the most reverend Primate the Archbishop of Canterbury and there were a number of good speeches—it read very well. In particular, I was impressed by the speech by my noble friend Lord Deighton, in which he gave us a little autobiographical counter. He spoke a little bit about his own experience as a banker. One thing I noted in particular. He said he was always conscious of the importance in banking of,
	“putting the customer first”. That is a very important aspect of banking culture. Indeed, banking culture was one of the most important things that the parliamentary commission was set up to look into.
	However, in proprietary trading there is of course no question of putting the customer first—because there is no customer. It is the bank trading on its own behalf. That involves a totally different culture and mindset. If you want to preserve in banking—as I think we should—the culture that my noble friend believes in, as he said on Thursday, then you should ban proprietary trading by banks altogether. It is fine for hedge funds. It is an excellent activity for them and they can do it very well. I am not suggesting that it should be made an illegal activity, but banks should not do it. Most of us on the commission—though clearly not all—came to that conclusion. We called for a review because we were unsure about the practicalities. There is some difficulty in defining the sort of proprietary trading that should be banned for banks because there is a need for market-making. The line between market-making and proprietary trading is very clear in the minds of those doing it, but whether it is clear in law is another matter. We thought it useful to look at the American experience.
	Finally on this, I say to my noble friend that we should look at the American experience but not too much at the American legislation. The complexity and detail of the American legislation was simply appalling. It is a problem across the legislative system that they have in the United States. My noble friend quite rightly referred to the Volcker rule because Paul Volcker insists that there should be a ban—for cultural reasons, above all. He also told us, when he gave evidence to the commission, that the legislation introduced in Congress was certainly not the sort he had in mind.
	Having said that, I wish the Government well in this. It will be an important review, for the reasons that I have outlined. I commend the Government for repenting, if slightly belatedly—but as the right reverend Prelates on the Bishops’ Benches will know, better “the sinner that repenteth”, et cetera. Thank you very much.

Lord Higgins: My Lords, I thought the noble Lord, Lord Turnbull, was going to come in. I welcome these clauses, although these four new clauses add even greater length to the Bill in addition to the amendments that have been made. The rate at which this Bill has been growing has been quite extraordinary, and we shall have to wait and see how it ends up. I remain rather concerned at the way in which drafting has taken place. My noble friend might consider whether it would be appropriate to have some form of consolidation Act bringing together this and previous legislation. If the legislation is to be understood by bankers, or indeed by anyone, it will be necessary to correlate the various provisions which will exist after we have completed our debate. We have four new clauses at Third Reading, which is subject to tight rules.
	I have merely one or two points. I am glad the ideas put forward by Mr Paul Volcker in the context of proprietary trading have been recognised as important. I have had many interesting exchanges with him, both
	as a Minister and as chairman of the Treasury Select Committee, and indeed in relation to the Claims Resolution Tribunal for Dormant Accounts in Switzerland, a quite different thing. He has been wise in all that he has said, but the problem is putting wise ideas into legislation.
	As my noble friend has just said, if the Financial Times in the past few days is anything to go by the American legislation is going to be over 1,000 pages, while over here we are going to have a review and then a review of the review. This is going to take some time. Meanwhile the American legislation may be in place. What are we doing to co-ordinate the approach? This is an international matter. There are British banks operating in America and American banks that operate here. It would create considerable difficulties were the rules in one country to differ significantly from those in the other. A degree of international co-operation as soon as possible will be important if, as we all want, we are to ensure that proprietary trading does not carry both the risk to which my noble friend Lord Lawson referred and dangers in general to the banking system.

Lord Phillips of Sudbury: My Lords, I ask whether the independent review under Amendment 3 is on the same basis as the review carried out by the PRA under Amendment 2. Amendment 2 specifically refers to the risk factors that proprietary trading embraces, but there is no reference to that in Amendment 3 with regard to the independent review of proprietary trading. Is the second, independent review to be undertaken on a wider basis than the PRA review? Will it be able to look at some of the broader cultural aspects of proprietary trading by banks? I hope that question is not too late in the day for the Minister.

Lord Deighton: I thank noble Lords for those questions. In response to my noble friend Lord Higgins, with respect to proprietary trading and international collaboration and co-operation, that is the approach that we shall be espousing. On consolidation, this is structured so as to be integrated into existing legislation, thereby ending up with a consolidated result.
	With respect to the question of my noble friend Lord Phillips, I confirm that the independent review of proprietary trading will not be constrained in what it can examine.
	Amendment 2 agreed.
	Amendments 3 and 4
	 Moved by Lord Deighton
	3: After Clause 8, insert the following new Clause—
	“Independent review of proprietary trading
	(1) The Treasury must, after receiving the report of the PRA under section (PRA review of proprietary trading) but before the end of the initial period, appoint one or more persons (“the review panel”) to carry out a review of proprietary trading engaged in (whether or not as a regulated activity) by relevant authorised persons.
	(2) The initial period is the period of 2 years beginning with the first day on which section 142G of FSMA 2000 is fully in force.
	(3) The members of the review panel must be persons—
	(a) who appear to the Treasury to be independent of the PRA, the FCA, the Bank of England and the Treasury, and
	(b) who do not appear to the Treasury to have any financial or other interests that could reasonably be regarded as affecting their suitability to serve as members of the review panel.
	(4) In appointing the members of the review panel, the Treasury must have regard to the need to ensure that the review panel (considered as a whole) has the necessary experience to undertake the review.
	(5) Before appointing the members of the review panel, the Treasury must consult the chair of the Treasury Committee of the House of Commons.
	(6) The reference in subsection (5) to the Treasury Committee of the House of Commons—
	(a) if the name of that Committee is changed, is a reference to that Committee by its new name, and
	(b) if the functions of that Committee (or substantially corresponding functions) become functions of a different Committee of the House of Commons, is to be treated as a reference to the Committee by which the functions are exercisable;
	and any question arising under paragraph (a) or (b) is to be determined by the Speaker of the House of Commons.
	(7) If the review panel consists of two or more members, the Treasury must appoint one of them to be the chair of the panel.
	(8) The review panel must, within a reasonable time after the end of the initial period, make a written report to the Treasury—
	(a) stating whether the panel agrees with the conclusions reached by the PRA in its report under section (PRA review of proprietary trading),
	(b) stating whether the panel recommends any further restrictions on any kind of proprietary trading in relation to relevant authorised persons, and
	(c) making such other recommendations as the panel thinks fit.
	(9) The Treasury must—
	(a) lay a copy of the report before Parliament, and
	(b) publish the report in such manner as they think fit.
	(10) Any expenses reasonably incurred in the conduct of the review are to be paid by the Treasury out of money provided by Parliament.
	(11) This section is to be read with the interpretative provisions in section (Reviews of proprietary trading: interpretation).”
	4: After Clause 8, insert the following new Clause—
	“Reviews of proprietary trading: interpretation
	(1) This section has effect for the interpretation of sections (PRA review of proprietary trading) and (Independent review of proprietary trading).
	(2) A person engages in “proprietary trading” where the person trades in commodities or financial instruments as principal.
	(3) In subsection (2)—
	(a) “commodity” includes any produce of agriculture, forestry or fisheries, or any mineral, either in its natural state or having undergone only such processes as are necessary or customary to prepare the produce or mineral for the market;
	(b) “financial instrument” includes anything specified in Section C of Annex I to Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments.
	(4) “Relevant authorised person” means a PRA-authorised person which—
	(a) is a UK institution,
	(b) meets condition A or B, and
	(c) is not an insurer.
	(5) Condition A is that the UK institution has permission under Part 4A of FSMA 2000 to carry on the regulated activity of accepting deposits.
	(6) Condition B is that—
	(a) the institution is for the purposes of FSMA 2000 an investment firm (see section 424A of that Act),
	(b) it has permission under Part 4A to carry on the regulated activity of dealing in investments as principal, and
	(c) when carried on by it, that activity is a PRA-regulated activity.
	(7) In subsections (4) to (6)—
	(a) “UK institution” means an institution which is incorporated in, or formed under the law of any part of, the United Kingdom;
	(b) “insurer” means an institution which is authorised under FSMA 2000 to carry on the regulated activity of effecting or carrying out contracts of insurance as principal;
	(c) “PRA-authorised person” and “PRA-regulated activity” have the same meaning as in FSMA 2000.
	(8) Subsections (5), (6)(b) and (7)(b) are to be read in accordance with section 22 of FSMA 2000, taken with Schedule 2 to that Act and any order under that section.”
	Amendments 3 and 4 agreed.
	Clause 9: Right to obtain documents and information
	Amendment 5
	 Moved by Lord Deighton
	5: Clause 9, page 25, line 18, at end insert “or (Independent review of proprietary trading)”
	Amendment 5 agreed.
	Clause 14: Bail-in stabilisation option
	Amendment 6
	 Moved by Lord Deighton
	6: Clause 14, page 27, line 37, leave out from “particular” to “any” in line 38 and insert—
	“(a) enable the Bank of England, for the purpose of enabling it to exercise in relation to the business of a building society any of the powers exercisable as a result of the amendments made by this Part—
	(i) to convert the building society into a company, or
	(ii) to transfer the business of the building society to a company which immediately before the transfer is owned by the Bank or by a person of a description specified in the order;
	(b) enable the Bank of England, in connection with the exercise of a power conferred by virtue of paragraph (a), to cancel membership rights or shares in the building society;
	(c) provide for any power exercisable as a result of the amendments made by this Part to be exercisable in relation to the company—
	(i) into which the building society is converted, or
	(ii) to which the business of the building society is transferred;
	(d) enable the Bank of England, in a case where it has transferred the business of a building society by virtue of paragraph (a)(ii), to dissolve the building society at any time after the transfer;
	(e) confer functions on the Treasury, the Bank of England, the FCA, the PRA or a bail-in administrator;
	(f) make further amendments of Part 1 of the Banking Act 2009;
	(g) amend or modify the effect of the Building Societies Act 1986 or”

Lord Deighton: My Lords, the amendments in this group are minor and technical amendments to Clause 14 and Schedule 2 that will help to ensure that the bail-in powers can be used as intended in order to deal effectively with the failure of a financial institution.
	First, they clarify the scope of the Treasury’s power to make an order applying the bail-in provisions to building societies. Since introducing this clause, we have had the opportunity to consider further what provisions may be necessary and are therefore in a position to specify this in the Bill.
	Moving to Schedule 2, minor amendments are made to new Section 44B. They permit supplemental property transfer instruments to make special bail-in provision. This is consistent with the situation for resolution instruments and will further assist in combining bail-in with the bridge bank stabilisation option. They amend new Section 48R which, without this amendment, applies only to resolution instruments that do not transfer securities. As special bail-in provision may relate to things that are not transferred, it is appropriate that the new Section 48R power applies irrespective of whether securities are transferred. By broadening the Section 48R power in this way, we can then remove the amendment to Section 21, which makes similar provision, as no longer necessary.
	Paragraph 15 of Schedule 2 is amended to address situations where a resolution instrument does not transfer securities, such as shares. Paragraph 15 amends the power to make continuity provision conferred by Section 18 of the Banking Act. This change will allow, for example, supplemental resolution instruments which do not transfer securities to make ancillary provision relating to an earlier transfer of securities. There are also some minor amendments to the compensation provisions.
	Where bail-in is combined with the bridge bank stabilisation option, the Treasury needs to make a resolution fund order. Some minor amendments are made to Section 52 and new Section 60A to ensure that the compensation arrangements for special bail-in provision will work with full effect in this context. Minor amendments are also made to Section 53 to ensure that the Treasury may make compensation orders under Section 53 whenever any form of supplemental order or instrument is made to effect a stabilisation option. Finally, we have brought the compensation provisions for bail-in further into line with the other stabilisation options by making it optional for the Treasury to make a further compensation order following a supplemental resolution instrument. I commend these amendments to the House.
	Amendment 6 agreed.
	Amendments 7 and 8
	 Moved by Lord Deighton
	7: Clause 14, page 28, line 5, after first “section” insert—
	““bail-in administrator” is to be read in accordance with section 12B of the Banking Act 2009 (as inserted by paragraph 2 of Schedule 2);”
	8: Clause 14, page 28, line 6, at end insert—
	““company” means a company as defined in section 1(1) of the Companies Act 2006 which is a public company limited by shares.”
	Amendments 7 and 8 agreed.
	Amendment 9
	 Moved by Lord Newby
	9: After Clause 18, insert the following new Clause—
	“Vetting by relevant authorised persons of candidates for approval
	After section 60 of FSMA 2000 insert—
	“60A Vetting of candidates by relevant authorised persons
	(1) Before a relevant authorised person may make an application for a regulator’s approval under section 59, the authorised person must be satisfied that the person in respect of whom the application is made (“the candidate”) is a fit and proper person to perform the function to which the application relates.
	(2) In deciding that question, the authorised person must have regard, in particular, to whether the candidate, or any person who may perform a function on the candidate’s behalf—
	(a) has obtained a qualification,
	(b) has undergone, or is undergoing, training,
	(c) possesses a level of competence, or
	(d) has the personal characteristics,
	required by general rules made by the regulator in relation to persons performing functions of the kind to which the application relates.
	(3) For the meaning of “relevant authorised person”, see section 71A.””

Lord Newby: My Lords, these amendments do two things. First, and most obviously, they implement the changes that have been agreed with members of the Parliamentary Commission on Banking Standards to implement the commission’s recommendations for a licensing regime.
	The Government’s amendments in Committee put in place the key element of those recommendations, the pivot on which the commission’s concept of a licensing regime rests, giving the regulators the ability to make rules for employees who were not senior managers, but commission members were concerned that the Government’s amendments did not give sufficient visibility or, as I put it, “full weight and impetus”, to the commission’s proposals and we undertook to bring forward amendments at this stage which will, as I said in Committee,
	“put beyond doubt the determination which we all share to see real change in this area”.—[ Official Report , 26/11/13; col. 1343.]
	In brief, these amendments make explicit the requirement on banks to certify staff and enforce banking standards in the first instance. Amendment 12 delivers the commitment to require banks and PRA-regulated investment firms to verify that people are fit and proper before appointing them to functions in which they could do significant harm to the firm. It also requires firms to review that assessment annually. This gives effect to the commission’s recommendations in paragraph 634 of its final report. Indeed, the Government have gone further. Amendments 9 and 11 impose similar obligations on firms in respect of senior managers and other persons who have been approved by the regulators.
	Amendment 12 also imposes the obligation on these institutions to issue certificates to persons performing functions in which they could cause significant harm to the firm to confirm that the fitness and properness checks have been carried out. As I explained on Report, it would not be appropriate to describe these documents
	as licences—the commission’s preferred term—but it is quite in order to call them certificates and they fulfil the same function. The amendment also imposes obligations on banks and PRA-regulated investment firms to maintain records of persons who have been issued with certificates. It is not, of course, necessary to require firms to keep lists of senior managers as their appointments will have been approved by the regulators and they are included in the financial services register kept by the FCA.
	Amendment 14 requires banks and PRA-regulated investment firms to notify the regulators of disciplinary action that they take against any of their staff, not just senior managers and persons who have been issued certificates. I can assure the House that notifiable disciplinary actions will not include verbal ticking-off, for example, for turning up late to work. Only formal disciplinary action, such as a written warning, need be notified and only if it is for reasons specified by the regulators in their rules. This gives the regulators the ability to check up on how firms are policing the conduct of individuals and it delivers on the recommendations in paragraph 642 of the commission’s report.
	Amendment 13 requires banks and PRA-regulated investment firms to notify individuals that banking standards rules apply to them. This delivers on recommendations in paragraph 643 of the commission’s report. Amendment 13 also requires banks and PRA-regulated investment firms to ensure that the individuals concerned understand their obligations under banking standards rules. This includes by providing suitable training. Amendments 9 and 12 also provide that, in checking that someone is fit and proper, firms must have regard to whether someone has a qualification or has undergone training prescribed by the regulator in its rules.
	As your Lordships would expect, the Government will seek to ensure that Clause 15 is removed when the Bill returns to the other place. The amendments I have just explained do, however, deliver what the parliamentary commission recommended and, indeed, go further in some places. Clause 15 would simply not deliver what the commission recommended, or anything like it. As we will explain in the other place, there are a number of areas in which Clause 15 is incompatible with the recommendations of the PCBS. First, it would retain but re-label the approved persons regime, which the PCBS sought as far as possible to remove. Secondly, it would impose on the regulator an obligation to check fit and properness annually, while the PCBS emphasised that it should be the bank, first and foremost, that took responsibility for maintaining standards. However, I hope the noble Lord, Lord Eatwell, will feel that the inclusion of material on training and professional qualifications in Amendments 9, 12 and 13 clearly shows that his underlying concerns on those points have been met.
	Finally, I turn to Amendments 17, 18 and 25. These amendments were tabled to address an essentially consequential issue which arose from the other amendments. Branches of foreign banks and investment firms operate in London. Often international banks will have both branches and subsidiaries. A branch is
	not a separate legal entity unlike a subsidiary company. However, it is likely that there will be staff working in branches in the UK who should be covered by the senior managers regime or the certification regime and so be subject to banking standards rules. Amendments 17 and 18 therefore give the Treasury the power to extend the senior managers, certification and banking standards regime to the UK branches of foreign banks and investment firms by order, after undertaking appropriate consultation. This will mean that branches and subsidiaries can be treated identically. Amendment 25 ensures that the order can be made only if approved by both Houses under the affirmative procedure so any such order will benefit from proper parliamentary scrutiny.
	The amendments here complete the implementation of the parliamentary commission’s recommendations for what it called a licensing regime. They provide a comprehensive regime for raising standards of conduct in banking and demonstrate our determination to see that change really does happen. I beg to move.

Lord Turnbull: My Lords, the PCBS always envisaged a two-tier system, one for senior persons where prior registration would be required, and the other for staff below that who are not senior persons but who are nevertheless capable of inflicting damage to the bank, its customers or its shareholders. We felt that the original provisions made for the upper tier were broadly okay, although there were one or two refinements about what a bank is. However, we thought that the provision made for the second tier was too vague. I therefore welcome these amendments, which bring much greater focus to who is covered and what the obligations are.
	There are two loose ends in this, which do not need to be concluded this evening. The first is that there are a number of functions in banks for which the APP—the approved persons regime—will be retained, namely the submitters of LIBOR numbers and those who have responsibility for money-laundering. It might be worth considering at some point whether instead of having three schemes for banks—the two new ones and the old one—they can all be consolidated. Finally, there is also the question of whether, in the fullness of time, a decision needs to be made on whether to continue with the old approved persons regime, with all the faults that we identified, in the rest of the financial services sector.

Lord Flight: My Lords, first, I declare an interest as a commissioner of the Guernsey Financial Services Commission. I will raise an issue which relates, as far as possible, to the territory being addressed right now: what will be the position of the banks in Crown dependencies of the UK under the new arrangements for ring-fenced banks? I have made inquiries of the Financial Secretary and got an answer. However, I have some reservations that the answer will not work very well. An issue analogous to the comment about foreign banks in London is that most of the banks in the Crown dependencies are not branches but subsidiaries. The proposal is for branches to be within the ring-fence and not subsidiaries. However,
	there is little incentive for banks to convert from subsidiaries to branches to come within the ring-fence. At the heart of this is an issue of UK interest in that those banks mostly effectively gather deposits that are lent to London, and are in some senses merely a legal fiction. Therefore if they will be within the ring-fence and will all have to convert to being branches, there is a strong practical case for including them within the UK deposit insurance scheme. If not, the banks in the Crown dependencies will stay as subsidiaries in the main, they will be outside the ring-fence, and there will be a decline in the deposits they upstream to the UK partly for regulatory reasons and partly because they will not be a subsidiary of the ring-fenced entity. I ask the Minister to think again about the precise arrangements regarding ring-fencing for the Crown dependencies.

Lord Brennan: My Lords, the present amendments fortify Part 4 by creating a comprehensive structure for conduct, standards, licensing and so on. Third Reading is an appropriate time for the Minister to clarify how in this structure directors, including the chairman of a bank, bear responsibility for the fulfilment of Part 4 as regards conduct and standards. Amendment 9 talks about:
	“Vetting by relevant authorised persons of candidates for approval”.
	The relevant authorised person is the bank. The bank ultimately sets its standards at directorial level, and directors carry a responsibility for it under statute and common law. Therefore I invite the Minister to clarify what, under this system, is the position of the directors and the chairman in terms of the enforcement of this framework for good standards.

Lord Eatwell: My Lords, I am glad to see that the introduction of Clause 15 on Report has at last seen the Government take the recommendations of the Parliamentary Commission on Banking Standards seriously in this matter and introduce these amendments that capture most, though not all, of the recommendations. What we have left, as the noble Lord, Lord Turnbull, has pointed out, is something of a tripartite muddle because we now have three different regimes affecting persons working within banks. I am afraid that this is characteristic of so many parts of this Bill and will need to be sorted out in future.
	I would like to ask some questions about Clause 17 which, as was pointed out, brings branches into part of this aspect of regulation. As the House will be aware, in recent months the Prime Minister has significantly weakened Britain’s regulatory protections of its banking system by encouraging the establishment of branches in this country. Previously, the regulatory authorities had strongly discouraged this because they are not then regulated by British regulators but by their home regulator. The Prime Minister has chosen to weaken this protection particularly by encouraging the establishment of Chinese branch banks, which will be regulated by the Chinese authorities.
	However, what is particularly interesting about Clause 17 is that it brings some branches possibly within some British regulatory ambit. I say possibly because according to this clause the Treasury may by order provide that authorised persons falling within any of the descriptions are relevant authorised persons.
	Relevant authorised persons, for those who have not participated in these debates before, are actually banks. The Treasury can choose which branches will be brought into the ambit. It is enormously important that the branches should be. The noble Lord, Lord Newby, was absolutely right in this respect. I hope the Prime Minister will not undermine this legislation by instructing the Treasury to exclude particular branches, perhaps those emanating from Chinese banks, from this regulation.

Lord Newby: My Lords, I am very grateful to noble Lords for the general welcome that they have given these provisions. I have some sympathy with the noble Lord, Lord Turnbull, and the tripartite system of regulation which we now find ourselves with but the approved persons regime is still needed, in our view, not least for people responsible for money-laundering. At some point we may want to see whether it is possible to rationalise all these provisions but I do not think at this stage it would be sensible to attempt it.
	The noble Lord, Lord Flight, asked about banks in Crown dependencies and referred to the discussions that he had with the Financial Secretary on this. I will take his concerns back to the Financial Secretary and ensure that we bring some clarity to these discussions so that people in the Crown dependencies and banks can be clear of their position.
	The noble Lord, Lord Brennan, asked about the role of directors and responsibility for the enforcement of the standard. One of the key things we are trying to achieve here is to put the responsibility on the banks to ensure that their staff on appointment have and continue to follow adequate standards. The alternative is to say to the regulator, “You have a look at all these people and make sure that they are behaving in a responsible way and have the appropriate qualifications”. We believe that the banks should not be able to duck out of that and that it is for directors and the board to ensure that they follow the rules and do not hide behind the regulator.
	The noble Lord, Lord Eatwell, asked whether it would be possible for the Treasury to choose certain categories of branches and treat them in a different way from other categories: in other words, whether it would be possible to deal with Chinese banks in a different way. Your Lordships’ House has spent many a happy hour discussing the meaning of “may”. My belief and understanding is that in the situation we are discussing “may” means that the regulators will adopt rules in respect of branches and will treat all branches equally.

Lord Eatwell: That is very helpful, but will the noble Lord therefore explain why proposed new Subsection (3B) begins with the word “If” rather than “When”?

Lord Newby: I think that is consequential on using “may”.
	Amendment 9 agreed.
	Amendments 10 to 12
	 Moved by Lord Deighton
	10: After Clause 18, insert the following new Clause—
	“Determination of applications for approval
	In section 61 of FSMA 2000 (determination of applications), in subsection (2)—
	(a) omit the “or” at the end of paragraph (b), and
	(b) after paragraph (c) insert “or
	(d) has the personal characteristics,”.”
	11: After Clause 20, insert the following new Clause—
	“Duty to notify regulator of grounds for withdrawal of approval
	In section 63 of FSMA 2000 (withdrawal of approval), after subsection (2) insert—
	“(2A) At least once a year each relevant authorised person must, in relation to every person in relation to whom an approval has been given on the application of the authorised person—
	(a) consider whether there are any grounds on which a regulator could withdraw the approval under this section, and
	(b) if the authorised person is of the opinion that there are such grounds, notify the regulator of those grounds.
	(For the meaning of “relevant authorised person”, see section 71A.)””
	12: After Clause 23, insert the following new Clause—
	“Certification of employees by relevant authorised persons
	After section 63D of FSMA 2000 insert—
	“Certification of employees
	63E Certification of employees by relevant authorised persons
	(1) A relevant authorised person (“A”) must take reasonable care to ensure that no employee of A performs a specified function under an arrangement entered into by A in relation to the carrying on by A of a regulated activity, unless the employee has a valid certificate issued by A under section 63F.
	(2) “Specified function”—
	(a) in relation to the carrying on of a regulated activity by a PRA-authorised person, means a function of a description specified in rules made by the FCA or the PRA, and
	(b) in relation to the carrying on of a regulated activity by any other authorised person, means a function of a description specified in rules made by the FCA.
	(3) The FCA may specify a description of function under subsection (2)(a) or (b) only if, in relation to the carrying on of a regulated activity by a relevant authorised person of a particular description—
	(a) the function is not a controlled function in relation to the carrying on of that activity by a relevant authorised person of that description, but
	(b) the FCA is satisfied that the function is nevertheless a significant-harm function.
	(4) The PRA may specify a description of function under subsection (2)(a) only if, in relation to the carrying on of a regulated activity by a relevant PRA-authorised person of a particular description—
	(a) the function is not a controlled function in relation to the carrying on of that activity by a relevant PRA-authorised person of that description, but
	(b) the PRA is satisfied that the function is nevertheless a significant-harm function.
	(5) A function is a “significant-harm function”, in relation to the carrying on of a regulated activity by an authorised person, if—
	(a) the function will require the person performing it to be involved in one or more aspects of the authorised person’s affairs, so far as relating to the activity, and
	(b) those aspects involve, or might involve, a risk of significant harm to the authorised person or any of its customers.
	(6) Each regulator must—
	(a) keep under review the exercise of its power under subsection (2) to specify any significant-harm function as a specified function, and
	(b) exercise that power in a way that it considers will minimise the risk of employees of relevant authorised persons performing significant-harm functions which they are not fit and proper persons to perform.
	(7) Subsection (1) does not apply to an arrangement which allows an employee to perform a function if the question of whether the employee is a fit and proper person to perform the function is reserved under any of the single market directives or the emission allowance auctioning regulation to an authority in a country or territory outside the United Kingdom.
	(8) In this section—
	“controlled function” has the meaning given by section 59(3);
	“customer”, in relation to an authorised person, means a person who is using, or who is or may be contemplating using, any of the services provided by the authorised person;
	“relevant PRA-authorised person” means a PRA-authorised person that is a relevant authorised person.
	(9) In this section any reference to an employee of a person (“A”) includes a reference to a person who—
	(a) personally provides, or is under an obligation personally to provide, services to A under an arrangement made between A and the person providing the services or another person, and
	(b) is subject to (or to the right of) supervision, direction or control by A as to the manner in which those services are provided.
	(10) For the meaning of “relevant authorised person”, see section 71A.
	63F Issuing of certificates
	(1) A relevant authorised person may issue a certificate to a person under this section only if the authorised person is satisfied that the person is a fit and proper person to perform the function to which the certificate relates.
	(2) In deciding whether the person is a fit and proper person to perform the function, the relevant authorised person must have regard, in particular, to whether the person—
	(a) has obtained a qualification,
	(b) has undergone, or is undergoing, training,
	(c) possesses a level of competence, or
	(d) has the personal characteristics,
	required by general rules made by the appropriate regulator in relation to employees performing functions of that kind.
	(3) In subsection (2) “the appropriate regulator” means—
	(a) in relation to employees of PRA-authorised persons, the FCA or the PRA, and
	(b) in relation to employees of any other authorised person, the FCA.
	(4) A certificate issued by a relevant authorised person to a person under this section must—
	(a) state that the authorised person is satisfied that the person is a fit and proper person to perform the function to which the certificate relates, and
	(b) set out the aspects of the affairs of the authorised person in which the person will be involved in performing the function.
	(5) A certificate issued under this section is valid for a period of 12 months beginning with the day on which it is issued.
	(6) If, after having considered whether a person is a fit and proper person to perform a specified function, a relevant authorised person decides not to issue a certificate to the person under this section, the authorised person must give the person a notice in writing stating—
	(a) what steps (if any) the authorised person proposes to take in relation to the person as a result of the decision, and
	(b) the reasons for proposing to take those steps.
	(7) A relevant authorised person must maintain a record of every employee who has a valid certificate issued by it under this section.
	(8) Expressions used in this section and in section 63E have the same meaning in this section as they have in that section.””
	Amendments 10 to 12 agreed.
	Clause 24: Rules of conduct
	Amendments 13 and 14
	 Moved by Lord Deighton
	13: Clause 24, page 37, line 45, at end insert—
	“64B Rules of conduct: responsibilities of relevant authorised persons
	(1) This section applies where a regulator makes rules under section 64A (“conduct rules”).
	(2) Every relevant authorised person must—
	(a) notify all relevant persons of the conduct rules that apply in relation to them, and
	(b) take all reasonable steps to secure that those persons understand how those rules apply in relation to them.
	(3) The steps which a relevant authorised person must take to comply with subsection (2)(b) include, in particular, the provision of suitable training.
	(4) In this section “relevant person”, in relation to an authorised person, means—
	(a) any person in relation to whom an approval is given under section 59 on the application of the authorised person, and
	(b) any employee of the authorised person.
	(5) If a relevant authorised person knows or suspects that a relevant person has failed to comply with any conduct rules, the authorised person must notify the regulator of that fact.
	(6) In this section “employee”, in relation to an authorised person, has the same meaning as in section 64A.
	(7) For the meaning of “relevant authorised person”, see section 71A.””
	14: After Clause 24, insert the following new Clause—
	“Requirement to notify regulator of disciplinary action
	After section 64B of FSMA 2000 (inserted by section above) insert—
	24
	“64C Requirement for relevant authorised persons to notify regulator of disciplinary action
	(1) If—
	(a) a relevant authorised person takes disciplinary action in relation to a relevant person, and
	(b) the reason, or one of the reasons, for taking that action is a reason specified in rules made by the appropriate regulator for the purposes of this section,
	the relevant authorised person must notify that regulator of that fact.
	(2) “Disciplinary action”, in relation to a person, means any of the following—
	(a) the issuing of a formal written warning;
	(b) the suspension or dismissal of the person;
	(c) the reduction or recovery of any of the person’s remuneration.
	(3) “The appropriate regulator” means—
	(a) in relation to relevant authorised persons that are PRA-authorised persons, the FCA or the PRA;
	(b) in relation to any other relevant authorised persons, the FCA.
	(4) “Relevant person” has the same meaning as in section 64B.
	(5) For the meaning of “relevant authorised person”, see section 71A.””
	Amendments 13 and 14 agreed.
	Clause 25: Definition of “misconduct”
	Amendments 15 and 16
	 Moved by Lord Deighton
	15: Clause 25, page 39, line 38, leave out “authorised” and insert “PRA-authorised”
	16: Clause 25, page 40, line 11, leave out “authorised” and insert “PRA-authorised”
	Amendments 15 and 16 agreed.
	Clause 26: Meaning of “relevant authorised person”
	Amendments 17 and 18
	 Moved by Lord Deighton
	17: Clause 26, page 41, line 9, at end insert—
	“(3A) The Treasury may by order provide that authorised persons falling within any of the following descriptions are “relevant authorised persons” for the purposes of this Part—
	(a) non-UK institutions (or non-UK institutions of a specified description) that are credit institutions;
	(b) non-UK institutions that are investment firms of a specified description.
	“Specified” means specified in the order.
	(3B) If the Treasury propose to make an order under subsection (3A) they must consult—
	(a) the FCA,
	(b) the PRA,
	(c) any organisations that appear to them to be representative of interests substantially affected by the proposals, and
	(d) any other persons that they consider appropriate.”
	18: Clause 26, page 41, line 12, at end insert—
	“( ) “non-UK institution” means an institution that is not a UK institution;
	( ) “credit institution” means any credit institution as defined in Article 4.1(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council;”
	Amendments 17 and 18 agreed.
	Amendment 19
	 Moved by Lord Watson of Invergowrie
	19: After Clause 28, insert the following new Clause—
	“Obligations relating to anti-money-laundering compliance: review
	Within two weeks of the passing of this Act, the Chancellor of the Exchequer shall make a Written Statement to the House of Commons stating whether the provisions of this Act bind the Financial Conduct Authority to include anti-money-laundering compliance as one of the obligations covered under the new personal responsibility mechanisms created by the material the Act inserts into FSMA 2000 including, but not limited to, the senior management functions, Banking Standard Rules and Senior Persons Regime.”

Lord Watson of Invergowrie: My Lords, my noble friends Lord Brennan and Lord McFall have tabled amendments on the issue of anti-money-laundering at previous stages of the Bill. It is with
	some regret that we feel we have to return to the issue as it has not been dealt with to our satisfaction or sufficiently seriously.
	We accept that the coalition has acknowledged that it shares the view that this issue is of the utmost importance, and that it intends that the Bill should deal with it. However, in all its responses so far, I believe that it has failed to show that it has understood the crux of the matter and, in turn, has not amended the Bill appropriately. It is for this reason that my noble friend Lord Brennan and I have submitted this further amendment at Third Reading.
	It is apt that, in preparing for the debate, I came across a press release of a court case held in London earlier today involving the imprisonment of a former Goldman Sachs banker who was sentenced to four and a half years for laundering £8 million on behalf of James Ibori, the former governor of Nigeria’s oil-producing state of Delta. Mr Ibori has himself been in prison since April of last year, having received a 13-year sentence after pleading guilty to various counts of fraud and money-laundering. He is the most senior Nigerian politician to have been held to account for the corruption that has blighted that large and very important African country. At the April 2012 court case, it was stated by the prosecutor, no less, that Ibori and his associates had used multiple accounts at Barclays, HSBC, Citibank and Abbey National—now part of Santander—to launder funds. Millions of pounds in total passed through these accounts, some of which were used to purchase expensive London property. The point is that there has been no investigation into those four organisations following that case, which leads me to ask your Lordships what disincentives there are for banks not to continue with their somewhat lax approach to some very large sums of money that are proffered to them. That is why it is important that we deal with this issue by inserting a provision in the Bill today, or at least when it returns to another place.
	On Report, the noble Lord, Lord Newby, promised that the coalition Government would provide a commentary on the early amendments that my noble friends Lord Brennan and Lord McFall and I submitted, in order to explain both why they thought them unnecessary and how exactly the new personal responsibility mechanisms in the Bill would include anti-money-laundering compliance obligations. The noble Lord, Lord Deighton, wrote to my noble friend Lord Eatwell on 29 November, but I regret to inform noble Lords that his letter did not provide a satisfactory response.
	The letter from the noble Lord, Lord Deighton, claimed that the amendments on Report would be counterproductive by requiring all junior staff involved in compliance to be covered by the senior persons regime, when in fact the opposite is the case. My noble friends and I sought the advice of independent counsel on this issue, which was reflected in a clearly worded amendment designed to ensure that the senior management of a bank can be held accountable for breaches of any bank’s anti-money-laundering obligations.
	I urge the coalition to heed this advice and bring forward a new amendment in another place which reflects the debate in this House. I believe that failure to do so would mean that the buck for anti-money-laundering compliance could stop with the relatively junior post of money-laundering reporting officers. This is exactly the system that has been in place for many years and has clearly been found wanting. This is why we continue to raise the issue at this late stage of the Bill.
	The Bill is in danger of implementing a groundbreaking and highly effective recommendation of the Parliamentary Commission on Banking Standards in a manner that could be singularly ineffective by merely maintaining the status quo. This should be avoided at all costs.
	I should also say a little about the Government’s explanation of how the new personal responsibility mechanisms in the Bill will include anti-money-laundering compliance. Unfortunately, the letter from the noble Lord, Lord Deighton, also falls short in reassuring my noble friends and me in this respect. Instead, the argument appears to be that the note that the FCA provided on Report about anti-money-laundering, and the Treasury’s recent anti-money-laundering report outlining the approach and work of UK regulators, demonstrate that the FCA is fully committed to dealing with anti-money-laundering compliance issues.
	However, this misses the point. Whether the FCA is or is not fully committed—and I am perfectly willing to give the benefit of the doubt on that—the fact remains that its attempts and that of its predecessor the FSA to enforce anti-money-laundering laws have been largely unsuccessful. In advancing that argument, I refer noble Lords to the FSA’s 2011 report, which found that in a review of banks, 75%—I repeat, 75%—of those banks were not meeting their anti-money-laundering obligations. That report also highlighted that banks were making the same mistakes as they did a decade earlier when the regulator reviewed the banks that had taken £900 million from the corrupt Nigerian dictator Sani Abacha.
	The letter from the noble Lord, Lord Deighton, stated that the Treasury would raise my concerns with the FCA about the note. I welcome that. In this respect, I would also welcome reassurance that this will take the form of a statement from the Chancellor of the Exchequer two weeks after the Bill receives Royal Assent—or preferably earlier—clearly setting out that the FCA is bound both to require banks to identify a senior person as having responsibility for anti-money-laundering compliance and to include it in both the new banking standards rules and the remuneration code.
	Such a statement is vital to be binding on the FCA to include anti-money-laundering compliance as one of the obligations. I beg to move.

Lord Brennan: My Lords, I support this amendment. The debate on anti-money-laundering that we have undertaken during the course of this Bill has led the Treasury and government Ministers to send colleagues and me a number of letters and documents. This was extremely courteous and informative—but legislatively useless. The noble and learned Lord, Lord Steyn, once described this kind of material as an exercise in
	investigating “legislative archaeology”, principally because it had no real significance. Neither do these letters. You cannot legislate by epistle; you do it by the text of the Bill.
	Everyone accepts that money-laundering is a major issue. Today is International Anti-Corruption Day. It is also the anniversary of HSBC’s enormous fine for money-laundering imposed last year in the United States. The concern reflects the fact that in the developing world in particular there is a constant, never-ending haemorrhage back into the developed world and our banking system of money that should be going to the poor. Something should be done about it.
	The explanation given thus far by the Government is that the FCA has the responsibility for dealing with money-laundering and it is for it to do so. On our side, we do not think that that is strong enough. If in today’s Amendments 2 and 3 the Government feel robust enough to say that the Treasury must take steps to review proprietary trading, why should it not tell the FCA that it must take steps, always and actively, to counter money-laundering. Why the diffidence? Why not put a plain statement before Parliament, now or through the amendment, that anti-money-laundering counts, that we are against it and that the FCA must ensure that banks deal with it.

Lord McFall of Alcluith: My Lords, I support the amendment. In evidence from business people to the Treasury Committee and the parliamentary commission it was said that good and firm regulation is a competition issue. Given that we aspire for London to be maintained as a global centre for financial products, it is important to recognise that dirty money comes in and out. The example was given of HSBC. It acquired a Mexican bank in 2001 in America. From day one the board was told by the compliance officer that no decent compliance functions were available. Notwithstanding that, the situation continued for six or seven years in which drug money was laundered, people died in Mexico as a result, and HSBC was fined almost $4 billion by the US authorities. If that can happen to a UK-based bank, it can be happening elsewhere. It is important that we ensure that regulation in this country is firm.
	Mention was made of General Abacha. In 2006 there was an investigation by the FSA that did not go anywhere because the regulator did not have authority. It is therefore important that in this legislation we underline the regulator’s authority. The regulator did not have authority because there was a tension—and there will still be a tension, despite the new architecture—between the financial stability of companies and conduct of business. If we are to make London an attractive global centre, we have to understand the elephant in the room—money-laundering. I am afraid that, if we do not give the regulator an express duty and authority on money-laundering, we could find the problems that happened with Nigeria in 2006 and elsewhere being replicated. That case has still not been investigated authoritatively enough. Having this anti-money-laundering element in the Bill would be extremely important, and I support the amendment.

Lord Flight: My Lords, perhaps I may make the point that I made last time this matter came up for debate—a point that is staring at us. The problem is
	with parts of the world where corruption, drugs and political corruption are rife. Much more demanding anti-money-laundering requirements are needed when accounts are opened for individuals or organisations from such parts of the world.
	We already have a factfile that grades different countries around the world according to the extent of their corruption—so there is, if you like, a textbook. If those standards were required, it would, apart from anything else, discourage banks from potentially getting involved. Also, rather than imposing greater demands on everybody—I do not think anyone is suggesting that the average Mr and Mrs Brown from Dorking is engaged in money-laundering—much more demanding standards would be applied when dealing with organisations and individuals from parts of the world where there are the real money-laundering problems.

Lord Deighton: My Lords, I think that I can safely say that every Member of this House will agree with the noble Lords, Lord Brennan, Lord Watson of Invergowrie, and Lord McFall of Alcluith, about the importance of the fight against money-laundering and other financial crime and about the importance of ensuring that the banks discharge their responsibilities in this area properly—absolutely no question. I hope therefore that the statement that I am making now will reassure them, more than my letters have done, that anti-money-laundering compliance in banks will be fully covered in the new senior managers regime. I can assure noble Lords that anti-money-laundering compliance in a bank will always ultimately fall within the responsibilities of a senior manager in that bank. The FCA will also have extensive powers to ensure that banks are clear about where these responsibilities lie.
	First, under the new senior managers regime, the regulator will specify senior management functions in its rules. These will cover such roles as the chief executive and the finance director and may extend to any function that involves an individual managing aspects of a firm’s business that could have serious consequences for the firm or the wider economy. The total number of individuals covered by the new regime is likely to be smaller than those currently performing functions of significant influence in banks. In line with the recommendations of the PCBS, all the senior decision-takers—the most senior people in banks who take important decisions—will be covered by the senior managers regime.
	Secondly, under the senior managers regime provisions that are now in the Bill, there will have to be statements of responsibility in respect of each senior manager. The banks will have to supply a statement with each application to the regulator for approval of the appointment of a new senior manager. The bank will have to update a statement whenever there is a significant change in a senior manager’s responsibilities. The regulators will also have the power to set out the form that the statements should take. They will also be able to require banks to verify the information in the statements in a way that they direct. As a result, the regulators will be able to tell who is responsible for anti-money-laundering compliance in a bank. They will also be able to detect any gaps in the responsibilities
	by comparing the statements of the senior managers in a bank. Senior management is always ultimately responsible for ensuring that the bank complies with all applicable legal requirements, including anti-money-laundering law. It is inconceivable that a senior manager will not be responsible in this area. Beneath senior management level there will, of course, be other staff involved in anti-money-laundering compliance work and these will include money-laundering reporting officers. In addition, the Government have deliberately retained the power for the regulator to pre-approve individuals performing key roles below senior management level, such as money-laundering reporting officers, even if those roles are not senior management functions. I am sure your Lordships would agree that this is a sensible measure.
	We are also introducing, in line with the recommendations of the Parliamentary Commission, a certification and banking standards regime, applying to all employees of banks. As a result of those changes, the FCA will be able to set standards of conduct for all bank employees who may come into contact with money-laundering or other financial crime. Banks will have to certify annually that people performing particular functions are fit and proper to do them. These are roles in which an individual could do significant harm to the bank or its customers, such as trading or compliance roles or, of course, roles that involve preventing financial crime. The Government’s measures will ensure that senior managers in banks can be held to account for discharging their responsibilities in relation to anti-money-laundering compliance. The regulators will know who has those responsibilities and what those responsibilities are.
	No one doubts the importance of the fight against money-laundering and financial crime. The Government’s reforms will ensure that banks and their senior managers will take their responsibilities in this area seriously and will start to discharge them properly. I hope therefore that, in the light of the assurances that I have given, the noble Lord, Lord Watson, will feel able to withdraw his amendment.

Lord Watson of Invergowrie: My Lords, I thank the Minister for that clearly considered response and I note what he says. Certainly there is great value in having clearly on the record in Hansard that it will be very senior people who are required to be responsible. That is all to the good and I welcome that, but I am still disappointed that the Minister has not gone a bit further. He talked about the regulator having powers. That is fine, but the regulator may or may not choose to exercise those powers in a particular way. As my noble friend Lord Brennan said, if the word “must” can be used in other amendments to the Bill, why cannot it be used in this one?
	When involved in any issue, there is clearly a time when you feel that the horse you are flogging has undoubtedly been categorised as dead, and I do not think that we are going to get any further on this just now. However, very important points have been made and many of them have been committed to the record stating that anti-money-laundering is a very serious
	issue. I fully acknowledge that the noble Lord, Lord Deighton, says that the coalition accepts that, but I do not understand why he is not prepared, on its behalf, to go that step further. Perhaps the FCA objected—I do not know—but clearly it is not something that we are going to achieve at this stage. On that basis and on the basis of what has been clearly spelt out, I beg leave to withdraw the amendment.
	Amendment 19 withdrawn.
	Amendment 20
	 Moved by Lord Newby
	20: After Clause 123, insert the following new Clause—
	“Duty of FCA to make rules restricting charges for high-cost short-term credit
	(1) In section 137C of FSMA 2000 (FCA general rules: cost of credit and duration of credit agreements), after subsection (1) insert—
	“(1A) The FCA must make rules by virtue of subsection (1)(a)(ii) and (b) in relation to one or more specified descriptions of regulated credit agreement appearing to the FCA to involve the provision of high-cost short-term credit, with a view to securing an appropriate degree of protection for borrowers against excessive charges.
	(1B) Before the FCA publishes a draft of any rules to be made by virtue of subsection (1)(a)(ii) or (b), it must consult the Treasury.”
	(2) In Schedule 1ZA to FSMA 2000, in paragraph 11 (FCA’s annual report), in sub-paragraph (1), after paragraph (h) insert—
	“(ha) any rules that it has made as a result of section 137C during the period to which the report relates and the kinds of regulated credit agreement (within the meaning of that section) to which the rules apply,”.
	(3) The FCA must ensure any rules that it is required to make as a result of the amendment made by subsection (1) are made not later than 2 January 2015 and apply (at least) to agreements entered into on or after that date.”

Lord Newby: My Lords, I turn to the Government’s amendments on high-cost, short-term—or payday—lending. The Government are committed to action to protect borrowers from the harm that these lenders cause. We have already taken decisive action to overhaul regulation of the payday lending sector, with the Financial Conduct Authority taking on its broad new powers in relation to consumer credit from April.
	The FCA has already set out tough proposals to clamp down on the key causes of consumer detriment, including capping the number of rollovers and curbing the misuse of continuous payment authorities. However, the Government have agreed to do more. We want to put an end to the unfair and extortionate cost of borrowing from payday lenders and to prevent the spiralling costs faced by those struggling to repay their loans.
	There is a growing evidence base, including lessons from other countries, that a cap on the costs is the right way forward for consumers. Of course, we are not just talking about an interest rate cap, which evidence shows is likely to be far less effective. A cap should include all fees and charges which may be incurred in relation to a payday loan, including default charges and rollover fees.
	FCA powers are already sufficiently broad to ensure that charges of all kinds can be covered in the cap. This Bill presents the ideal opportunity to ensure swift
	action to protect consumers from unfair and spiralling costs and to give the FCA a definitive parliamentary mandate to act now. That is why the Government are introducing this amendment to require the FCA to impose a cap on the cost of payday loans. Under this new duty, the FCA must use the powers given to it by the Government in the Financial Services Act 2012 in relation to such loans.
	In Committee, noble Lords asked about the framework within which the cap will be designed, and I will explain a little how this amendment delivers that framework. Designing a cap on the cost of credit is not a job for government; nor is it right that the detail of a cap should be enshrined in primary legislation, given that the industry it is intended to bind is so fast-moving and innovative. That is why the cap must be set by the independent and expert regulator, which has flexible powers to ensure that the cap remains effective. The FCA must be allowed to design a cap that works in UK consumers’ interests and fits the UK market.
	However, the amendment makes clear the FCA’s overarching objective in this endeavour: it must make rules to impose a cap to protect consumers from excessive charges imposed by high-cost, short-term lenders. This language echoes the FCA’s consumer protection objective. The FCA must make rules to advance one or more of its operational objectives—consumer protection, market integrity and competition. This applies to the rules to implement the cap, just as it does to all FCA rule-making. The FCA’s competition duty also applies. It must consider how the rules affect the ability of the market to serve consumers’ interests.
	Introducing a cap is not without risks or potential adverse consequences, including reducing access to credit for some individuals who are in financial difficulty. The FCA will not be able to eliminate those risks but it will seek to manage them. It will be important that the FCA strikes the right balance in designing and setting the cap. That is why it must publish a cost-benefit analysis on the impact of its proposals and undertake a consultation. The amendment specifically requires that the FCA must consult the Treasury before it publishes and consults on any draft rules. To reflect the importance of keeping the rules current and effective, the FCA must report on any rules it makes under Section 137C, including rules imposing a cap on loan costs, in its annual report.
	Finally, I should point out why it is not worth defining payday lending in great detail in primary legislation. Putting a narrow definition in primary legislation could lead to unintended consequences. Lenders may just try to circumvent the definition. The amendment therefore allows the FCA to specify precisely which types of high-cost, short-term loans are captured when it makes its rules to effect the cap.
	I now turn to the matter of timing, which is the subject of the amendment proposed by the noble Lords, Lords Eatwell and Mitchell, and the noble Baroness, Lady Grey-Thompson, which proposes to bring the timetable for implementing a cap forward to 1 October next year. I fully support the intention to bring the cap into force as soon as possible in order to protect consumers. That is precisely why the Government
	are taking this opportunity to bring forward legislation to require the FCA to impose a cap, so that the FCA can get on with implementation as quickly as possible. Introducing this new duty on the regulator ensures its efforts are focused on implementing the cap rather than on having to spend time and resources making the case for using its cost-capping powers in the first place.
	The amendment provides a backstop date for implementation. The cap must be in place by at least 2 January 2015. Noble Lords should be in no doubt that, if the FCA can deliver sooner, it will. But there are a number of steps that must be taken before the cap is to be implemented. All of these are important. If rushed, they could put consumer protection at risk for the sake of speed. As I have already said, the risks of getting the cap wrong are also high—reducing credits for individuals or potentially pushing them into the arms of less regulated lenders.
	Perhaps it would be helpful if I set out the FCA’s proposed timetable. The FCA’s current timetable for implementing a cap is ambitious but deliverable, and crucially allows the FCA to draw on the Competition Commission’s rigorous investigation of the market, which is currently underway. The FCA has already made good progress on background research on capping the cost of credit. It will start its detailed analysis phase in the new year, including drawing on the evidence the Competition Commission has already collected, through existing statutory information gateways between the two organisations, and where necessary, seeking information from firms.
	The Government are bringing forward secondary legislation to allow the FCA to gather information from the industry as soon as possible to help it design the cap. The FCA will consult in the spring on its draft proposals, at around the same time as the Competition Commission is due to publish its provisional findings. It will have to publish the cost-benefit analysis when it consults. Consultation will take place over the summer, and the FCA plans to make the rules in the autumn. Again, this is likely to be around the same time as the Competition Commission’s final report. Lenders will have the rest of the year to update their systems and processes to ensure they comply with the new requirements, and the cap will come into effect at the beginning of January.
	Were a 1 October implementation date adopted, the FCA would be so far out of sync with the Competition Commission’s work that it would not get the full value from the Competition Commission’s insight into the market to ensure the cap helps to secure the best outcomes for consumers. Such an early date would mean that important components of the FCA’s rule-making processes would need to be jettisoned, be that evidence-gathering in preparation of a cost-benefit analysis, consultation with interested parties on the proposals, or preparation time for the lenders to get their systems and processes in order to meet the new requirements and become responsible, compliant lenders. Noble Lords opposite may laugh at this, but if we were not proposing to do this, they would be the first to criticise the Government for not properly doing every single phase of what I have just described.
	These processes are vital to ensuring that the cap works in the best interests of consumers and avoids the risks and unintended consequences I described earlier. Difficult though this choice is, the Government are not prepared to compromise the process, and I hope that noble Lords will agree. I am grateful to noble Lords for putting the spotlight on the timetable, but I hope that I have been able to persuade them that the risk to borrowers of rushing the design and implementation of a cost cap is simply too great and that the FCA is committed to implementing the cap as quickly as is reasonably possible. This, I trust, provides sufficient reassurance to convince them not to move the amendment.
	I turn now to the amendment of the noble Lord, Lord Sharkey, who has spoken so passionately during the Bill about the lessons we can learn from the way in which the state of Florida has approached regulation of payday lenders. His amendment aims to ensure that the FCA must impose restrictions on the number of loans an individual may have and the times a loan may be rolled over at the same time as it makes rules imposing a cap on the cost of payday loans. The Government fully agree that regulatory action is necessary to tackle both of these issues. The FCA has already proposed to curb rollovers. The noble Lord is, I know, convinced of the need for an outright ban, as in Florida. I have considerable sympathy with that conviction, but I have not seen robust evidence to show that a ban is the right approach for UK consumers. The ability to roll over a loan—for instance, if an unexpected expense crops up one month—offers a flexibility which is valued by some consumers.
	In its consultation published on 3 October, the FCA has suggested a limit of two rollovers but has specifically also sought views on permitting one rollover only. This is a significant advance on the industry’s own codes of practice—which limit rollovers to three—with which, sadly, far too few lenders comply. The consultation period has just closed and the FCA is currently considering responses. Legislating to ban rollovers now could prejudge that consultation and evidence-gathering exercise. I am sure the noble Lord will agree that the outcome should be guided by the evidence.
	Of course, a cap on the cost of payday loans, which will include rollover charges, will be a key factor in undercutting lenders’ reliance on rollovers as a generator of profits. I am confident that a cap on the cost of the loan and a cap on the number of rollovers, as the FCA has proposed, should help stop the cost of rolled over loans spiralling while still meeting borrowers’ needs.
	The noble Lord also proposes that the FCA must curb multiply sourced simultaneous loans. I again have great sympathy with his intention here but in this case, too, the FCA is committed to taking action. The FCA is approaching the solution differently from the noble Lord but the effect is the same. Rather than limiting irresponsible borrowing, as the noble Lord proposes—particularly as this could have the side-effect of restricting choice and flexibility for consumers who are able to repay—the FCA has focused on restrictions to tackle irresponsible lending. It has proposed to put strict new requirements on firms to undertake affordability
	assessments to ensure that a borrower can afford to make sustainable repayments. This will include looking at other loans a borrower has outstanding.
	However, the FCA is not stopping there. The quality and value of lenders’ affordability assessments clearly relies to a significant degree on the nature of the data available on an individual’s borrowing. The Government and the FCA have real concerns that data sharing is not working to support responsible lending and consumers’ interests. The FCA has already warned the industry that it must improve and that, if it fails to improve, the regulator will take action. The FCA has committed to exploring the best way to improve data sharing and thereby lending decisions. I will ask the FCA to keep noble Lords updated on this work.
	I hope the noble Lord has been reassured that the FCA is committed to taking decisive action to curb rollovers and multiply sourced simultaneous loans. It will take action as soon as it assumes its regulatory responsibilities for this sector in April, so it is not necessary to expand the FCA’s cost-capping responsibilities to include these areas. I am very grateful to him, however, for drawing these issues to the House’s attention and highlighting the lessons we, and in particular the FCA, can learn from Florida. I trust that he will feel able not to move his amendment.

Baroness Oppenheim-Barnes: Before the Minister sits down, perhaps I may remind him that earlier this year the noble Lord, Lord Borrie, and I tabled an amendment to a previous financial Bill. A long-sought clarification, which is very important in these payday loans, is that the consumer should know not only in percentage terms but also in money terms how much it is going to cost them. Will the Minister therefore remind the FCA that there is a new EU directive, effective from 1 January 2013, wherein the very difficult and confusing equation is to be replaced by an actual amount in money? The only bad thing about this is that it has to be printed in a smaller print than the actual interest amount. Please will the Minister make sure that the FCA is knowledgeable about this and that it will see that it is brought to the attention of consumers as early as possible in the loan procedure?
	Amendment 21 (to Amendment 20)
	 Moved by Lord Sharkey (LD)
	21: After Clause 123, line 9, at end insert “, and to preventing multiply sourced simultaneous loans and rollovers”

Lord Sharkey: My Lords, I rise to move Amendment 21 and to speak to Amendment 20. I congratulate the Government on bringing forward their amendment to cap the total cost of payday loans. I am grateful to the Minister and to his officials for meeting me to discuss the issue and for providing us with copies of the letters between the Financial Secretary and the FCA.
	Amendment 20 clearly has the right intent but it raises several important questions as do the letters between the Treasury and the FCA. Nowhere in the Government’s amendment or in their correspondence with the FCA is there any mention of the problem
	now discussed by the Minister of multiply sourced simultaneous loans. The Financial Secretary says in his letter to the FCA that the main aim of the cap is to ensure that PDL customers do not pay excessive charges for borrowing and to minimise the risk to those borrowers who struggle to repay and to protect them from spiralling costs, which make their debt problem worse. In short, far fewer payday loan customers should get into debt problems.
	Simply imposing a cap, as I think the Minister was acknowledging, will not produce this result if borrowers can take out multiply sourced simultaneous loans. If borrowers can do this, any cap will be ineffective in controlling indebtedness. My amendment, as the Minister has said, proposes a ban on these multiply sourced loans, as is the case in Florida. I think I heard the Minister say that the FCA will consider the problem caused by multiply sourced simultaneous loans when he considers the mechanism of the cap. I see the Minister is nodding in agreement that that is the case.
	My amendment also proposes a ban on rollovers, as the Minister has said. That is also the case in Florida. I remind noble Lords that in Florida no loan may be taken out until all previous loans have been settled in full and then only after a 24-hour cooling off period. Rollovers are banned in Florida because they are the chief way of luring borrowers into a spiral of increasing debt. Here in the United Kingdom, 28% of all payday loans are rolled over and 50% of payday loan revenue, according to the OFT, comes from these loans. The FCA does not appear to understand the problem with rollovers. In its October proposals it suggested that rollovers be limited to two. It provided no evidence to suggest that this would have the desired effect and it is pretty obvious, I think, that it would not. Five days ago, the financial services consumer panel recommended in evidence to the FCA that rollovers be limited to one. I think the case for rollovers being banned is very strong. Will the FCA explicitly consider banning rollovers and will it publish its cost benefit analysis—the one the Minister talked about—of the relative merits of banning rollovers and limiting them to one or two only?
	The Treasury letter to the FCA raises other questions. The Financial Secretary states:
	“The Government is also committed to ensuring that you can access the information you need to design the cap. The Government will bring forward secondary legislation to allow you to collect information to support your new duty as soon as possible”.
	The Minister has tried to explain what some of this information might be, but I should be grateful for more clarification on exactly what the FCA is going to be looking for and also confirmation that the Government will publish a draft of the proposed secondary legislation well before bringing it to Parliament.
	In his reply to the Financial Secretary’s letter, Martin Wheatley of the FCA says that it is possible for firms in other EEA member states to provide a payday loan service through the internet to UK consumers within the electronic commerce directive. He went on to say that this is not something that the FCA can mitigate. What does that mean? Does it mean that the FCA cannot cap such transactions and, if it does, what is the point of the Government’s Amendment 20? The
	Financial Secretary’s letter to the FCA makes reference, as the Minister has done, to data-sharing practices. It says:
	“There are a number of regulatory interventions in the market which may help to create the right conditions to ensure the cap is effective. For example, the Government shares your concerns that data sharing practices may not be supporting good consumer outcomes”.
	This all seems rather opaque and quite a long way from plain English. Does this mean that the Government want credit agencies and lenders to pool data? Does it explicitly include the consideration of establishing a real-time lending database? I should be grateful if the Minister could confirm to the House that the answer is yes in both cases.
	The whole matter of a cap turns on effective implementation and the evidence suggests overwhelmingly that we need a real-time database of loans to do exactly that, but the level of the cap is also critical. Amendment 20 requires the FCA to secure,
	“an appropriate degree of protection for borrowers against excessive charges”.
	There is no attempt in the amendment or in the correspondence to define “excessive” or to give guidance about how a judgment of what is excessive is to be arrived at. This seems an important and, perhaps, critical defect in the amendment. Surely the FCA must be given some guidelines in defining excessive for the purpose of fulfilling its duty. For example, we already know that payday loan borrowers in Florida pay, at most, one-third of the costs that such borrowers pay here in the United Kingdom. Will the FCA consider this kind of disparity in its definition of “excessive”? Will the Government set out in writing and publish the guidelines that the FCA must follow, and the factors it must consider, in reaching a definition of what may count as “excessive”?
	I turn briefly to subsection (1B) of the Government’s amendment. It states:
	“Before the FCA publishes a draft of any rules … it must consult the Treasury”.
	I accept that the FCA will consult widely and not just with the Treasury before it publishes these draft rules but I am concerned about what happens after the publication of such draft rules. The FCA’s performance to date is not an obvious guarantee that any such draft rules will be what is required under the Government’s amendment. For its October publication of the draft rules, which the Minister has referred to, the FCA considered all the available evidence and proposed to allow two rollovers but no cost cap of any kind. A month later, the Treasury considered the same evidence and decided that it was sufficient to require the imposition of a cap. In other words, the Treasury appears to believe that the FCA got it wrong, which does not inspire confidence in the judgment of the FCA.
	For that reason, and for reasons of openness and transparency, I believe it is important that there is the opportunity and time allowed for detailed public comment on whatever draft proposals the FCA comes up with and, in particular, that Parliament is given the opportunity formally to scrutinise the FCA draft proposals. I should like to know whether the Government will commit to allowing that opportunity and that time for detailed public comment and for allowing Parliament that opportunity to scrutinise FCA draft proposals.
	Finally, I should point out that nowhere in Amendment 20 or in the two letters that we have seen is there any mention of a limit on the amount of the loan or of a minimum or maximum term. Will the Government confirm that the FCA will explicitly consider both a limit on the amount and on the term of any payday loan? I repeat that I welcome the Government’s intention in bringing forward Amendment 20 and I look forward to hearing the Minister respond to the questions I have asked. I beg to move.

Lord Higgins: My Lords, I want to make two very brief points. The amendment refers to “charges” and to “high-cost credit”. However, the words “interest” or “the rate of interest” appear nowhere in the amendment. I would have thought that there was some case for explicitly including that in the Bill, because the use of the other, rather wider, expressions leaves too much scope for the situation to be fudged. I would be grateful if my noble friend would say something about that.
	We have been talking very much about payday loans and their provision; but it has become apparent that a number of charges made overall by clearing banks sometimes can approach, if not exceed, the limits charged by payday loan providers. I would like my noble friend’s assurance that the organisation will take account of that also and, if necessary, deal with the problem of very high overall charges—particularly with regard to unauthorised overdraft charges, for example—made by clearing banks as well as by payday lenders.

Lord Mitchell: My Lords, my head has been spinning in disbelief since the introduction of this Government’s amendments. Even two weeks ago the Prime Minister, the Chancellor and the Business Secretary were resolute in their opposition to any form of capping of interest rates offered by payday lending companies and other suppliers of short-term credit; yet here we are today, legislating for just such a cap. We are stating to the FCA that what was previously defined as a “may” now will become a “must”. That is a good outcome and I, for one, applaud the Government for this massive U-turn. It could not have been easy for them to eat their words, but politics is politics and if the heat has got too hot it is time to get out of the kitchen.
	For nearly four years I have been working on a campaign to regulate payday lending. Of course, I knew about loan sharks and the terrible misery that they cause; but I had not really focused on the way this industry was developing. When I did, I was aghast. Here was a business that was enticing people into debt and playing on their vulnerabilities. Any way you cut it and any way you measure it, 6,000% interest is beyond morality and decency. I felt that it had to be regulated and that it was my duty to do so within this Parliament.
	Last year we managed to persuade the Government to include an amendment to the Financial Services Act that gave the Financial Conduct Authority the power to regulate all aspects of payday lending and, in particular, the capping of interest rates. We gave it the teeth, but sadly it did not bite. Indeed, it
	decided that it was not yet persuaded that these rates should be capped at all. One can only wonder: if 6,000% had not moved the FCA, would 10,000% or 100,000% do so?
	A little-known fact is the extent of financial support that payday lending companies receive from the City. I have read that Barclays Bank lent Wonga over £250 million; when I investigated further I found that the number was very much higher. If you consider how much all the clearers and all the other financial institutions must be lending to the payday lending companies, the number must be many billions of pounds. The City purports to have washed its hands of this grubby sector, but in truth it participates by using payday lenders as surrogates.
	I have this to say to Barclays and, in particular, to its chairman. If your mission really is to clear up the mess of the last 15 years, then please tell me: what is your bank doing, funding the payday lending industry? We have come a long way in these past four years and tonight will be a milestone. But we need to go further still. I address these comments to the FCA. Please ban all advertising for short-term loans targeted at children. It is bad enough that people have to borrow money from the payday lenders—but giving payday lenders carte blanche to use sophisticated advertising to encourage young children to persuade their parents to get into more debt has to be morally wrong.
	Despite appearances to the contrary, I am not against the payday loan industry. We need it, it is essential and it must be successful, but we want an industry that offers loans at fair rates and does not extort. I think that this amendment achieves just that.
	Can the Minister confirm unequivocally that “must make rules” means that the FCA is compelled to introduce a cap on the total cost of these loans? Can he elaborate on what powers the Treasury will have to influence the cap under proposed new subsection (1B), where it states that the FCA “must consult the Treasury”? I know the noble Lord, Lord Sharkey, made a point on this, and that the noble Lord, Lord Newby, explained the situation but there has been a degree of wriggle room in all this and we must be absolutely certain where we stand.
	We have one reservation with the Government’s amendment. To address that issue, we have put down our further amendment. The Government want these changes to take effect by 2 January 2015 and we want it to be by 1 October 2014. Why have we tabled an amendment for the sake of just 90 days, particularly since several bodies have said that the FCA needs time to prepare for the implementation of the interest rate cap? We understand that it needs to do the job properly but six months after it takes responsibility for regulating consumer credit provides a reasonable amount of time while ensuring that vulnerable people are protected in the lead-up to Christmas 2014.
	At this very moment in this month of December, the payday lending companies are in full throttle. Last month, the Money Advice Service’s annual Christmas survey showed that over a million people planned to take out payday loans to pay for Christmas. Some 34% of adults in the UK believe that they will start the new
	year in debt because of the cost of Christmas. By wanting the new amendment to become effective on 1 October 2014, we are determined to make 2013 the last payday rip-off Christmas. By choosing this date, we will accomplish that goal. I beg to move.

Baroness Cohen of Pimlico: My Lords, I rise to support Amendment 21 and will speak to Amendment 20. I am sure that we are all very grateful to my noble friend Lord Mitchell for his tireless efforts in bringing the payday lenders under regulation. I am sure that that is the best result for everybody. I also support his remarks about how we actually need payday lenders. They fill a gap that no one else fills. If you have no food in the house or your car needs repairing in order for you to get to work, and if your family and friends cannot help, there is nobody but the payday lenders. They are colossally efficient—as my noble friend Lord Mitchell found out when he bravely took out a payday loan. They will get you the money very quickly.
	That is a function that, in my youth, was fulfilled by employers by way of something called the “sub”. At one point, I was the industrial relations man, temporarily, on the Western Avenue extension. About a third of that whole site received subs on their pay. The rules stopped you receiving a sub for more than three days ahead of time and of course it was not paid interest. I do not think that happens any more and the payday lenders have come into that gap.
	What have not come into that gap and are not yet organised to fill it are the credit unions. I very much welcome the most reverend Primate the Archbishop of Canterbury’s view that the credit unions can fill this gap, but they cannot do so at the moment. They are just not fast or efficient enough. I would very much like to encourage, in all work on credit unions that the most reverend Primate is undertaking—and which I shall be pleased to join in on—that they be a bit more like the dreaded payday lenders in their speed, efficiency and ability to respond to need.

The Lord Bishop of Birmingham: My Lords, I take a moment to thank the noble Lord, Lord Lawson, for his kind remarks about my friend the most reverend Primate’s speech last Thursday. I shall pass that on to him. He regrets that he is not in his place today. He is presiding over a whole number of bishops—it amounts to about the number of noble Lords in your Lordships’ House tonight—up in York.
	I support these amendments, particularly Amendment 22 on the timetable. I am grateful for the Government’s approach and seriousness towards this payday lending crisis. The examples we have heard from noble Lords about the experience of poverty are gruesome. I should like to introduce a new element of competition to the response time for this particular bit of industry in terms of its timetable, because the risk, referred to by the noble Lord, Lord Newby, to the industry itself in not getting it right is paralleled by the risk just mentioned by the noble Lord, Lord Mitchell, of people having yet another Christmas borrowing at too great a cost and risk to their own future and that of their family. The Minister is trying to set a final deadline of January but I ask that he really encourage the industry to bring this forward to 1 October.
	We have heard about the industry’s complexities and the credit unions that are needed. We have also heard of the encouragement this would give to those who are working very hard to provide effective money advice to those who are managing unmanageable debt and to help young people who have been mentioned start handling their money properly. Local charities, churches and the faith groups are responding to the Government’s approach to tackling this global financial crisis. However, the slow timetable—several years before all this is implemented—is a completely different timetable from that of someone who has no resources, who has no back-up and who is looking for food tomorrow. I encourage people to support this amendment.

Lord Eatwell: My Lords, my noble friend Lord Mitchell in speaking to his amendment on the proposed date referred to 90 days. One might ask how 90 days can make a difference. Surely when the Government need something to be done they can get it done. The idea that somehow the whole process is so darn elaborate that they cannot do it in a period of time which saves 90 days on their side is, in the true meaning of the word, incredible. On the other hand, for the borrower 90 days includes Christmas Day 2014. That is a big issue, because this is the period when short-term borrowing is at its peak. That is why it is incumbent on this Government to take swift action. They have been dragging their feet on this issue for four years. It is incumbent on them to take swift action and that is why Amendment 22 is so important.
	The noble Lord, Lord Sharkey, has raised a crucial and frightening point—that payday lenders within the European Economic Area could lend within the UK. I hope the Minister will be able to tell us that we are not wasting our time completely this evening—because that is what that would mean we would be doing—and that the noble Lord’s fears are unfounded.
	Swift action is so important that when this amendment is called I intend to test the opinion of the House.

Lord Newby: My Lords, noble Lords have raised a number of issues and questions. I shall do my best to answer. The noble Baroness, Lady Oppenheim-Barnes, discussed the way in which the total cost of the loan, as opposed to the interest rate, is portrayed, and of course many people do not understand interest rates. The Government are discussing with the European Commission the relative prominence of the total cost of the loan. This discussion is taking place in the context of the Commission’s review of the consumer credit directive, so I hope we are well on top of that.
	My noble friend Lord Sharkey asked a raft of questions. I hope that I managed to write them all down. He asked whether the FCA understood the particular problems of multiply sourced simultaneous loans. I can assure him that that is within its remit. My noble friend talked about rollovers and asked whether the FCA would look at one or none as part of this review. I can give him that assurance. He asked whether he could see a draft regulation in a timely manner. We will try to do that. Of course, if we are going to consult on draft regulations, things such as the odd 90 days here and there make a lot of difference. Our ability to consult properly at any point in this process
	requires us to follow something like the timetable that I set out earlier. He asked whether data sharing is being considered as part of the FCA’s remit. I can assure him that the FCA is looking at that.
	My noble friend asked for a definition of “excessive” and why it was not in the Bill. The FCA will be looking at existing definitions of excessive, including that in Florida. Different people in different places who cap payday loans have different definitions of excessive. There is no single definition that is uniquely right. It has to be taken in the context of all the other factors and the overall design of the scheme. The FCA will be looking at international definitions as part of that work.
	My noble friend asked whether there will be an opportunity and time in Parliament for debate on the publication of the draft rules. That partly goes to the speed with which we do that. If, as I set out, the FCA publishes a consultation paper by the end of May, it will be perfectly possible for Parliament to debate it. There are a number of ways in which that could be done. In your Lordships’ House, it is now very easy for individual Members to get a debate on an issue within a very few weeks, even if no other formal debate was allowed. I would be very happy to raise that issue in the usual channels. Finally, my noble friend asked whether the FCA will consider the limit to cover both the amount and the term of the loan. I can give him that assurance.
	The noble Lord, Lord Higgins, asked why we do not refer to interest in the Bill. The provision covers every aspect of the cost of a payday loan, of which interest is only one part. The definition in the Bill subsumes interest.

Lord Higgins: Would it not be better none the less at line 9 of the amendment to say “against excessive rates of interest and charges” as the rate of interest is quantifiable whereas charges are much more amorphous?

Lord Newby: Charges are also quantifiable. The aim, as we have set out very clearly, is to cover all components of the total cost of the loan.
	The noble Lord, Lord Higgins, asked about the high charges that high street banks sometimes impose. Issues there can be investigated by the FCA and no doubt it may well wish to do so.
	The noble Lord, Lord Mitchell, asked a number of questions. I first congratulate him and my noble friend Lord Sharkey on the persistence with which they have pursued this issue, bringing before the House evidence of what is really happening in the market and helping everyone involved in the process to gain a better understanding of the scale of the problem. I can confirm that the government amendment does what it says in that the FCA will not have any option but to make rules. It has to do it. The “must” is a real “must”. In terms of the powers that the Treasury will have, the purpose here is to ensure that the Treasury has an input into the consultation and development of the policy by the FCA. However, we have been very clear that the primary responsibility must rest with one body and that the appropriate body is the FCA. I will come back to the noble Lord’s point on timing in a moment.
	The noble Baroness, Lady Cohen, said that she wished that credit unions could be more like payday loan companies. I think many noble Lords would share that view but, sadly, they have some way to go before they get into that position.
	The noble Lords, Lord Mitchell and Lord Eatwell, and the right reverend Prelate the Bishop of Birmingham, urged the FCA to go quicker. The FCA will go as quickly as it can. Our amendment requires it to have the new system in place no later than the beginning of January. If it proves possible to do it do it earlier, certainly if it were possible to do it before Christmas, I know that the FCA will do so, and will use its best endeavours to bring forward these proposals as quickly as possible. Certainly, if we are going to include within the system features such as a real-time database, I am afraid that this cannot be done very quickly. Everybody has seen the success and failure both of Governments and other organisations to introduce IT systems very quickly. The thought that one can do this within a matter of weeks prior to consultation, possibly with no consultation, seems to me totally fanciful.
	I end by saying—because I think a number of noble Lords slightly question this—that the Government and the FCA are absolutely committed to getting this system in place as soon as they possibly can. The FCA has said it is going to do it. It has already set a very tight timetable. I understand that when the system was introduced in Florida it took longer or at least as long as we are proposing to do it here. There is no lack of commitment to do it but we want to do it right. We want it to work. We do not want to have to change it as soon as we have implemented it because we found we rushed it and it has not worked. That is why the FCA has come forward with a speedy but deliberative approach. We think that makes absolute sense. That is why the deadline is in our amendment. I commend our amendment to the House.

Lord Sharkey: Before the noble Lord sits down, perhaps I may prompt him to address the question of payday loan companies operating outside the UK in the EEA trading in this country. Do they or do they not? Will they be subject to the cap or not?

Lord Newby: My Lords, this is a complicated area that we have just begun to start looking at. In order to minimise the extent to which overseas operators might be able to operate in this area, we need to take our time and do the job properly. It is another contributory argument for doing the job in a deliberative manner.

Lord Sharkey: My Lords, I am grateful for the answers that the Minister has given, with the possible exception of the last one. I should be grateful if, as these deliberations take place, he would consider writing to us to tell us the latest position on these people trading from outside the country in the country. If that turns out to be possible, we need a radical rethink of exactly what we are about today. Leaving that to one side, I am reassured by the answers that my noble friend the Minister has given but I particularly want to stress that absolutely critical to this working at all is a real-time database. This is not about data sharing or
	the old system of batch processing. It will work only if real-time data processing and real-time lending information are available to the regulator and the lending companies. I hope that as the FCA proceeds it will come to an understanding that that is absolutely the case and an absolutely necessary requirement. Having said all that, I beg leave to withdraw the amendment.
	Amendment 21(to Amendment 20) withdrawn.
	Amendment 22 (to Amendment 20)
	 Moved by Lord Eatwell
	22: After Clause 123, line 19, leave out “2 January 2015” and insert “1 October 2014”

Lord Eatwell: My Lords, I was struck by the reply of the noble Lord, Lord Newby, on the issue of companies from other parts of the European Economic Area trading on the internet. He said that the Government are just beginning to look at this. It is extraordinary that the Treasury does not know, now, what are the particular rules that affect financial trading within the European Economic Area. That is another incredible statement. We have been dragging our feet on this area. It is urgent that we deal with it with all due speed and that we ensure that the cap is in place before next Christmas. I therefore wish to seek the opinion of the House on Amendment 22.

Division on Amendment 22
	Contents 100; Not-Contents 163.
	Amendment 22 disagreed.

Amendment 20 agreed.
	Amendment 23
	 Moved by Lord Newby
	23: After Clause 123, insert the following new Clause—
	“Role of FCA Consumer Panel in relation to PRA
	In section 1Q of FSMA 2000 (the Consumer Panel), after subsection (5) insert—
	“(5A) If it appears to the Consumer Panel that any matter being considered by it is relevant to the extent to which the general policies and practices of the PRA are consistent with the PRA’s general duties under sections 2B to 2H, it may communicate to the PRA any views relating to that matter.
	(5B) The PRA may arrange to meet any of the FCA’s expenditure on the Consumer Panel which is attributable to the Panel’s functions under subsection (5A).””

Lord Newby: My Lords, I now turn to an amendment which will better position the PRA to take account of consumer interests by drawing on the views of the FCA’s Consumer Panel. This follows the debate at Lords Report stage where the noble Lord, Lord Eatwell, proposed amendments which would have created a role for the Consumer Panel by creating a duty on the PRA to consider representations made to it by the panel and to publish its responses, equivalent to the duty on the FCA.
	We have considered the issues carefully, as I said we would on Report, and have proposed alternative arrangements which are more proportionate to the PRA’s prudential remit, but deliver, we believe, the essence of the noble Lord’s amendment. Our amendment will confer a role on the panel by allowing it to raise issues it is considering with the PRA; for example, through meetings or in correspondence. It will also enable the PRA to meet the expenses of the Consumer Panel when the Consumer Panel discharges this function.
	This will ensure that the PRA can benefit from the expertise of the panel without the undue burden on either the PRA or the Consumer Panel of a binding requirement on the PRA to consult the panel each time the PRA changes its rules or policies.
	I have no doubt that this amendment, which has been welcomed and supported by the chair of the Consumer Panel, will strengthen the voice of consumers at the PRA, and I am pleased to add it to the list of improvements we have been able to make as a result of constructive debate and scrutiny in your Lordships’ House. I beg to move.

Lord Eatwell: My Lords, I welcome this amendment, which will add important coherence to the consideration of consumer affairs within the regulatory structure.
	Amendment 23 agreed.
	Amendment 24
	 Moved by Lord Deighton
	24: After Clause 124, insert the following new Clause—
	“Duty to meet auditors of certain institutions
	(1) Part 22 of FSMA 2000 (auditors and actuaries) is amended as follows.
	(2) After section 339A insert—
	“339B Duty to meet auditors of certain institutions
	(1) The FCA must make arrangements for meetings to take place at least once a year between—
	(a) the FCA, and
	(b) the auditor of any PRA-authorised person to which section 339C applies.
	(2) The PRA must make arrangements for meetings to take place at least once a year between—
	(a) the PRA, and
	(b) the auditor of any PRA-authorised person to which section 339C applies.
	(3) The annual report of each regulator must include the number of meetings that have taken place during the period to which the report relates between the regulator and auditors of PRA-authorised persons to which section 339C applies.
	(4) In subsection (3) “the annual report” means—
	(a) in relation to the FCA, every report which it is required by paragraph 11 of Schedule 1ZA to make to the Treasury, and
	(b) in relation to the PRA, every report which it is required by paragraph 19 of Schedule 1ZB to make to the Treasury.
	(5) In this section “auditor” means an auditor appointed under or as a result of a statutory provision.
	339C PRA-authorised persons to which this section applies
	(1) This section applies to a PRA-authorised person which—
	(a) is a UK institution,
	(b) meets condition A or B,
	(c) is not an insurer or a credit union, and
	(d) is, in the opinion of the PRA, important to the stability of the UK financial system.
	(2) Condition A is that the person has permission under Part 4A to carry on the regulated activity of accepting deposits.
	(3) Condition B is that—
	(a) the person is an investment firm that has permission under Part 4A to carry on the regulated activity of dealing in investments as principal, and
	(b) when carried on by the person, that activity is a PRA-regulated activity.
	(4) In this section—
	(a) “UK institution” means an institution which is incorporated in, or formed under the law of any part of, the United Kingdom;
	(b) “insurer” means an institution which is authorised under this Act to carry on the regulated activity of effecting or carrying out contracts of insurance as principal;
	(c) “credit union” means a credit union as defined by section 31 of the Credit Unions Act 1979 or a credit union as defined by Article 2(2) of the Credit Unions (Northern Ireland) Order 1985.
	(5) Subsections (2), (3) and (4)(b) are to be read in accordance with Schedule 2, taken together with any order under section 22.”
	(3) The italic cross-heading before section 339A becomes “General duties of regulator”.”

Lord Deighton: We now turn to the proposal to put in the Bill new requirements on regulators to meet the auditors of banks. This issue has been subject to extensive debate. The Government have been clear throughout that the regulators should carry the full responsibility for managing an effective relationship with the auditors of banks they supervise, and be held to account for how well they deliver it.
	The reasons for this are strong. Before the crisis, regulators neglected their engagement with auditors while the auditors themselves signed off on the accounts of banks which we now know were, in some cases, in dire straits. The Government took action. There is now a requirement in the Financial Services and Markets Act for the PRA to lay its code of practice on auditor engagement before Parliament, meaning that the regulators will be held accountable for how well they deliver on the requirement to engage with the auditors of banks.
	However, it has become clear how strongly the PCBS valued the opportunity to go further and specify the number of meetings in statute, to ensure auditors’ insights are used. For those reasons the PCBS is clear that, over time, this dialogue between auditors and regulators must not be allowed to lapse. The proposed amendment therefore includes two provisions to ensure that this crucial dialogue is preserved.
	First, the regulators must disclose in their annual report the number of meetings they have held with the auditors. This allows Parliament to hold the regulators to account for the frequency of meetings. Secondly, the regulators must meet at least once per year with the auditors of firms that the PRA, the leading prudential regulator, considers to be important to the stability of the United Kingdom economy. This is a minimum requirement. The Government believe that it is right to place the duty on the regulator to determine how many more meetings are required with the auditors of firms of particular types, consistent with its risk-based, judgment-led approach. This allows the regulators to focus their resources where the risks are highest.
	Some noble Lords may argue that the minimum requirement should be higher. The Government do not agree. The Government have said that the regulators must meet with any firm that may be important to the financial system at least once per year, but within this group, there will be firms of major and firms of minor significance.
	For firms of major significance, once may be too little; for firms of minor significance, once may be sufficient. For example, under the PRA’s current code, for banks that could have the most significant impact on financial stability, the PRA code mandates at least three meetings a year. For other firms whose failure could still materially impact the UK financial system, the PRA code mandates at least one bilateral a year. The FCA meets at least twice per year with the auditors of the most significant banks and at least once per year with those in the next largest category.
	The Government believe that it is right that Parliament does not seek to specify this level of detail in legislation. To do so would risk misaligning the PRA’s resources with the risks the financial system faces. The Government therefore believe that this amendment arrives at a suitable compromise between the desire to specify in the Bill a minimum number of meetings, to prevent meetings between auditors and regulators from lapsing entirely, and an approach that requires regulators to take responsibility for pursuing proportionate and high-quality engagement, and enhanced mechanisms for accountability. I commend these amendments to the House.

Lord Lawson of Blaby: My Lords, once again, I am extremely grateful to my noble friend Lord Deighton and his colleagues in the Treasury for agreeing to bring forward this amendment. As he pointed out, it is in response to a recommendation of the Parliamentary Commission on Banking Standards. Hitherto the Treasury has been reluctant to accept this, but it has now done so and it is in the Bill. Incidentally, this was also a recommendation of your Lordships’ Economic Affairs Committee, in its report on the auditors a little while back. This provision is needed in the Bill is because we have been here before. The Banking Act 1987—I introduced the Bill that led to that—enabled these meetings to take place, and for a number of years they did. However, in the run-up to the great banking crisis and meltdown they had ceased. That is why we on the commission felt that this time it was necessary to have this provision in the Bill, and I am grateful to my noble friend for that.
	I know that the hour is getting late but I should mention another matter that relates to a recommendation of the commission. There was lamentable failure of these meetings to take place and the fact that the auditors were in front of the crisis—the dog that never barked—was partly because of the lack of meetings and was largely the fault of the regulators at the time. It was their responsibility above all to seek such meetings. However, there was also the lamentable inadequacy of the accounting system at the time, IFRS. It is probably an inadequate system in general but it is particularly flawed when it comes to the auditing of banks. That is increasingly recognised within the accountancy profession. It is too late for me to go into the details, and I have explained the specific failings in previous debates and I will not go over the ground again.
	When the commission addressed this issue it said that since we cannot change IFRS because the “I” represents an international agreement—although it is, in fact, a European agreement because the Americans have made it clear that they do not want to have any part of it—the PRA must require the major systemic
	banks to produce a second set of accounts that satisfies the needs of prudential regulation and supervision. That involves a small extra cost to achieve a considerable objective.
	When this matter was discussed in Committee, my noble friend Lord Deighton said that there was no need to put such a provision in the Bill because the PRA had the power to do so—and I very much hope that it will do so. It is up to the Treasury Committee in another place to keep the PRA up to the mark. I hope that the present chairman of that committee will do that. Andrew Tyrie, the Member of Parliament for Chichester, outstandingly chaired the work of the Parliamentary Commission on Banking Standards and he secured its important and unanimous report. However, I was slightly alarmed in Committee when the Minister said that the regulators already have power,
	“to make rules requiring banks to prepare additional accounts, to the extent that this is permissible under EU law”.—[ Official Report , 23/10/13; col. 1022.]
	While I thank him for the amendment, I must ask him: if the PRA wishes a systemically important bank to present a set of accounts in a way that it feels is necessary for proper prudential supervision, what will it be prevented from doing under EU law? The House needs to know that.

Lord McFall of Alcluith: My Lords, I will be very brief in supporting the comments of the noble Lord, Lord Lawson. I have been interested in the relationship between the auditors and the regulator ever since Northern Rock went down in 2007. The question that the regulator should be keeping in mind in discussions with auditors on a yearly basis is, what is the point of an audit? The auditors tell us that it is to have a backward look at what has happened in a company, but there is a need to have a forward look at the risks that are happening, to issues like low risk and low probability, low risk and high probability, high risk and low probability, or high risk and high probability. These scenarios need to be included, because the auditors came to all the committees, the Treasury Committee in the past and the Treasury Committee now, and said that it was their business to look at the audit at that particular time. That is insufficient and there needs to be a greater engagement between the regulator and the auditors.
	I reminded the Minister that previously the regulator did not look at the business models of companies. They had nothing to do with them. Thankfully, the new chief executive, Martin Wheatley, has said that the business models are very appropriate for regulators to look at because the business models that were ignored let the PPI mis-selling scandal go for 18 years. There is a lot of work to do between the auditor and the regulator—and the question that I repeat again is for the regulator to say, what is the point of an audit? Auditors can come up to the mark and not just have a backward look or even a present look at the business model of a company but can ensure that there is also a forward look.

Lord Deighton: With respect to the question asked by my noble friend Lord Lawson about what constraints the EU law would put on the PRA getting the information
	in the form that it requests, this is merely tying it into what comes out of the capital requirement directive IV, just to make sure that it is consistent. I am not aware of a particular constraint, but I am aware that there will be additional disclosure responsibilities that come along with that. We really just want to integrate it, but I do not believe that it is a constraint; it should actually help with disclosure.

Lord Lawson of Blaby: I am most grateful, but will my noble friend agree to look further into this and, if there is a constraint, to write to me?

Lord Deighton: Of course, I would happy with that undertaking. I fully accept the observation from the noble Lord, Lord McFall, that an audit needs to have the context of the business model behind it to have a proper understanding of where the business is going. We will certainly encourage the regulator to ensure that the dialogue with the auditor takes into account what is really happening in the business and does not just look at the numbers in isolation.
	Amendment 24 agreed.
	Clause 126: Amendments of section 429 of FSMA 2000
	Amendment 25
	 Moved by Lord Deighton
	25: Clause 126, page 99, line 5, after “procedure)” insert “—
	(a) after “55C,” insert “71A(3A),”, and
	(b) ”
	Amendment 25 agreed.
	Amendment 26
	 Moved by Lord Newby
	26: After Clause 129, insert the following new Clause—
	“Recovery of expenditure incurred by Office for Legal Complaints
	(1) The Schedule to the Compensation Act 2006 (claims management regulations) is amended as set out in subsections (2) and (3).
	(2) The provision in paragraph 7 becomes sub-paragraph (1) of that paragraph.
	(3) In paragraph 7, after sub-paragraph (1) insert—
	“(2) The fees that may be charged by the Regulator by virtue of sub-paragraph (1) include fees in respect of costs incurred by the Regulator for the purposes of meeting any leviable OLC expenditure.“Leviable OLC expenditure” has the meaning given by section 173(7) of the Legal Services Act 2007.”
	(4) The Legal Services Act 2007 is amended as set out in subsections (5) and (6).
	(5) After section 174 insert—
	“OLC expenditure relating to claims management services
	174A OLC expenditure relating to claims management services
	(1) This section has effect at any time when no person is designated under section 5(1) of the Compensation Act 2006 (the Regulator in relation to claims management services).
	(2) In determining the leviable OLC expenditure for the purposes of section 173, any expenditure incurred, or income received, by the OLC in connection with the exercise of its functions in relation to claims management services is to be disregarded.
	(3) The Lord Chancellor may by regulations charge periodic fees for authorised persons for the purposes of meeting any costs incurred by the Lord Chancellor in respect of relevant OLC expenditure.
	(4) “Relevant OLC expenditure” means the difference between—
	(a) any expenditure of the OLC incurred in connection with the exercise of its functions in relation to claims management services, and
	(b) the aggregate of the amounts which the OLC pays into the Consolidated Fund under section 175(1)(g), (h) or (n), so far as relating to the exercise of its functions in relation to such services.
	(5) Regulations made under subsection (3) may, in particular—
	(a) permit the charging of different fees for different cases or circumstances (which may, in particular, be defined wholly or partly by reference to turnover or other criteria relating to an authorised person’s business);
	(b) enable the person exercising functions of the Regulator under section 5(9) of the Compensation Act 2006 to collect fees on behalf of the Lord Chancellor;
	(c) specify the consequences of failure to pay fees (which may include anything which could be specified in regulations under section 9 of that Act as a consequence of a failure to pay fees charged under those regulations).
	(6) In this section “authorised person” and “claims management services” have the same meaning as in Part 2 of the Compensation Act 2006 (see section 4 of that Act).”
	(6) In section 206 (Parliamentary control of orders and regulations), in subsection (4), after paragraph (o) insert—
	“(oa) section 174A(3) (power to charge fees on persons providing claims management services);”.”

Lord Newby: My Lords, I turn finally to the amendments that deal with claims management companies and the Office for Legal Complaints. It is essential that a new route of redress is available to consumers who feel that they have received a poor service from those providing claims management services, commonly referred to as claims management companies, or CMCs. It is also right that the claims management industry bears the cost of providing this new route of redress. I thank the noble Baroness, Lady Hayter of Kentish Town, for raising this issue at Report stage and I am delighted that she has put her name to this amendment.
	Section 161 of the Legal Services Act 2007 already makes provision for bringing complaints about regulated CMCs under the jurisdiction of the Office for Legal Complaints. Once commenced, this will give consumers greater scope for redress against regulated CMCs, including awards for financial compensation. Before Section 161 can be commenced, however, the correct mechanisms need to be put in place to ensure that the costs incurred by the OLC in relation to complaints about CMCs can be recouped. It is also necessary to ensure that these costs are borne by the claims management industry. It is right that costs associated with complaints about CMCs are paid for by the industry which creates them. It is also right to prevent the legal profession having to foot the bill for these costs or benefit from any income generated from recouping these costs.
	Turning to the detail of the amendments, it is usual practice for the designated regulator to recoup the costs of redress from those it regulates. In this case, the Claims Management Regulator, or CMR, is the designated regulator. The Legal Services Board, or LSB, will then levy the regulator for the OLC’s costs and reimburse the OLC. To ensure that the Claims Management Regulator can recoup the OLC’s costs, these amendments change the Compensation Act 2006 to enable the Secretary of State to make regulations to allow the
	Claims Management Regulator to charge CMCs, as part of their fees, for the OLC’s costs associated with CMC complaint-handling. The Legal Services Act 2007 already provides for a levy on the Claims Management Regulator, if one is designated. This enables the LSB to levy the regulator for costs incurred by the OLC in relation to claims management costs.
	That mechanism is applicable only when there is a designated person as the Claims Management Regulator. When no person is designated as the Claims Management Regulator, as is currently the case, this role falls to the Secretary of State. The mechanism does not operate in this situation as the Secretary of State cannot be levied. To address this, amendments to the 2007 Act are needed. They will change the Act to give the Lord Chancellor a new power to make regulations to allow him to recover the OLC’s costs associated with CMCs. These powers allow the Lord Chancellor to charge a periodic fee on regulated CMCs.
	Finally, in this situation further amendments are needed to address cross-subsidisation. The amendments will change the levy mechanism in the Legal Services Act 2007 to ensure that the calculation of the OLC’s expenditure which is leviable on the legal profession excludes both its costs and its income in relation to CMCs.
	These amendments are an important step in improving the redress system for consumers who have suffered from poor service from the claims management industry. It is right that consumers who have been treated unfairly are able to access this new route for redress through the OLC. I beg to move.

Lord Brennan: My Lords, these final amendments allow me to raise a point of general importance about the Bill. The amendments create yet a different and welcome addition to the commission’s original proposals.
	The Bill came to this House at 30 pages long. With today’s amendments, it is going to be about 200 pages long, with about 150 clauses. I suggest to the House that it is incumbent on all of us—but on the Government, in particular—to assist public understanding of where the Bill is now at. It is going back to the Commons, where most of it will not have been debated, and the strain on people in this House over the past few weeks has been immense. Therefore, I suggest to the Government two measures that they might consider taking.
	The first—although it sounds remarkable, it is of utility—is to prepare a set of Explanatory Notes on the Bill as it now is when it goes back to the Commons and when it is considered, as it will be, by the City of London in general and by the banking community and the lawyers in particular. The second point is that, from page 50 onwards, the Government’s response to the commission’s report of July 2013 very helpfully sets out 114 proposals with notes against them and proposed action. The Government have taken different positions on some of those, and there are additions to that list. It would be a great help if the list were revised, bringing it up to date to reflect what has actually happened.
	I do not want to appear tedious but the fact is that this is a major Bill and we need to do everything we can to make it as well understood as it can be.

Lord Eatwell: My Lords, I am delighted to support Amendment 26, which stands in the names of the noble Lord, Lord Deighton, and of my noble friend Lady Hayter of Kentish Town. She is very sorry she cannot be in her place this evening to say this herself, but she is very grateful to the Government not only for accepting the essence of her amendment, moved at Report, but also for turning in some far better drafting than she could have done. This was done under some tight time pressures, for which we are grateful to both of the Ministers concerned and to their staff. My noble friend cannot be here to thank the Government herself because she is at a Labour Party fundraising event to help fund the campaign to expel the Government from office, but in the mean time she does sincerely want her appreciation for the help to be recorded.
	The impact of the amendment is that, in future, consumers with complaints against claims management companies will be able to take these to the Legal Services Ombudsman to be resolved. They will therefore get redress when there is judgment in their favour. This will also help to drive up standards. By reporting repeat offenders to the regulator, it will help to get some of the CMC sharks out of the business. So congratulations to both to the noble Baroness, Lady Hayter, and to the Government for accepting the essence of her amendment.

Lord Deighton: My Lords, I know it is getting late, but as this group of amendments draws to a close, I hope you will permit me to spend a few moments reflecting on the changes that this Bill has undergone since it first arrived in this House, and to thank all those who have contributed to it in that time. On Second Reading in July, my noble friend Lord Newby remarked that the great strength of this legislation was due in no small part to the intense degree of scrutiny that it had undergone on its journey to this House, and the constructive spirit in which those of all political colours had contributed to it. This is surely even more true of the Bill that leaves this House today.
	My first thanks must go to the members of the Parliamentary Commission on Banking Standards, represented in this House by the noble Lords, Lord Turnbull, Lord McFall and Lord Lawson, the noble Baroness, Lady Kramer, and the most reverend Primate the Archbishop of Canterbury. The central role that they have played in shaping this legislation is one of the things that has made this Bill so unique; indeed, the great majority of the amendments that it has undergone in this House directly implement the recommendations of the Commission’s final report on professional standards and culture in the banking industry. These measures are not only the crowning achievements of this piece of legislation, but the final piece in this Government’s ambitious four-stage programme of reform for the banking sector.
	Many of the noble Lords in this Chamber today will have contributed to the first stage of that reform, the Financial Services Act 2012, which recast the regulatory architecture for financial services. This Bill, as it was introduced in another place, made
	provision for the second stage of that reform, the implementation of Sir John Vickers’s recommendations on structural reform of the banking sector, and the Bill that leaves this House today puts in place the two final pillars of that legislative programme, overhauling the culture of the banking industry, and driving out competition to improve outcomes for consumers. Of course, the Government’s commitment to implement the recommendations of the Commission’s final report through this Bill has meant that the task of scrutinising these incredibly important measures has fallen largely to this House.
	I shall respond to the noble Lord, Lord Brennan. As I understand it the explanatory notes have already been written for the amendments, and they will be published tomorrow. As always, my officials are a little bit ahead of the game, but we absolutely take on board the need to communicate this effectively, both to the other place and more broadly to the City.
	All these changes are a challenge to which this House has ably risen, but I must thank all noble Lords for their patience in giving such careful consideration to this wide-ranging and important set of provisions, particularly with the number of amendments that have been introduced, the speed with which drafts have been turned around, and the speed with which noble Lords have been asked to absorb so much information. In particular I must thank the opposition Front Bench, led by the noble Lord, Lord Eatwell, for its thoughtful and constructive contributions to the debate. I thank my noble friend Lord Newby for his support, without which it would not have been possible to provide the House with the level of response that it deserves, and my officials for their consistent hard work. Special thanks must go to parliamentary counsel for their heroic efforts in drafting amendments with such speed and precision.
	The Bill that leaves this House today is completely transformed from the one that arrived here five months ago, and it is hard to imagine how it could have reached its present state without the contribution of those that I have but briefly mentioned. It is a vital addition to the statute book, whose importance is hard to overstate. I beg to move.
	Amendment 26 agreed.
	Clause 131: Orders and regulations: general
	Amendments 27 to 29
	 Moved by Lord Deighton
	27: Clause 131, page 102, line 11, leave out “or the Secretary of State” and insert “, the Secretary of State or the Lord Chancellor”
	28: Clause 131, page 102, line 15, leave out “or Secretary of State” and insert “, the Secretary of State or the Lord Chancellor”
	29: Clause 131, page 102, line 18, leave out “Treasury or Secretary of State” and insert “person making the order or regulations”
	Amendments 27 to 29 agreed.
	Clause 134: Power to make further consequential amendments
	Amendments 30 and 31
	 Moved by Lord Deighton
	30: Clause 134, page 103, line 19, leave out “or Secretary of State” and insert “, the Secretary of State or the Lord Chancellor”
	31: Clause 134, page 103, line 21, leave out “Treasury or Secretary of State” and insert “person making the order”
	Amendments 30 and 31 agreed.
	Clause 135: Transitional provisions and savings
	Amendments 32 and 33
	 Moved by Lord Deighton
	32: Clause 135, page 103, line 31, leave out “or Secretary of State” and insert “, the Secretary of State or the Lord Chancellor”
	33: Clause 135, page 103, line 32, leave out “Treasury or Secretary of State” and insert “person making the order”
	Amendments 32 and 33 agreed.
	Clause 136: Extent
	Amendment 34
	 Moved by Lord Deighton
	34: Clause 136, page 103, line 41, leave out from “Ireland” to end of line 2 on page 104 and insert—
	“This is subject to subsection (2).
	(2) The amendments made by the following sections have the same extent as the enactments amended—
	(a) section 10 (preferential debts: Great Britain),
	(b) section 129 (power to impose penalties on persons providing claims management services), and
	(c) section (Recovery of expenditure incurred by Office for Legal Complaints) (recovery of expenditure incurred by Office for Legal Complaints).”
	Amendment 34 agreed.
	Clause 137: Commencement and short title
	Amendments 35 to 37
	 Moved by Lord Deighton
	35: Clause 137, page 104, line 5, at beginning insert “The following provisions—
	section (Duty of FCA to make rules restricting charges for high-cost short-term credit), and”
	36: Clause 137, page 104, line 8, leave out “Section 129 comes” and insert “Sections 129 and (Recovery of expenditure incurred by Office for Legal Complaints)(1) to (3) come”
	37: Clause 137, page 104, line 9, at end insert—
	“( ) Section (Recovery of expenditure incurred by Office for Legal Complaints)(4) to (6) comes into force on such day as the Lord Chancellor may by order appoint.”
	Amendments 35 to 37 agreed.
	Schedule 2: Bail-in stabilisation option
	Amendments 38 to 55
	 Moved by Lord Deighton
	38: Schedule 2, page 121, line 25, leave out from first “instrument” to “may” in line 26
	39: Schedule 2, page 125, line 39, after “41A(2)” insert “,or an associated supplemental property transfer instrument,”
	40: Schedule 2, page 125, line 41, at end insert—
	“( ) The reference in subsection (1) to an “associated” supplemental property transfer instrument is to a supplemental property transfer instrument in relation to which the original instrument (as defined in section 42(1)) is a property transfer instrument under section 12(2) or 41A(2).”
	41: Schedule 2, page 125, line 42, after “12(2),” insert “or a supplemental property transfer instrument in relation to which the original instrument is a property transfer instrument under section 12(2),”
	42: Schedule 2, page 126, line 42, at end insert—
	“( ) In section 52 (transfer to bridge bank), in subsection (3)(b), for “specified classes of creditor,” substitute “persons of a specified description,”.”
	43: Schedule 2, page 127, line 4, at end insert “or”
	44: Schedule 2, page 127, line 5, leave out from “41A(2)” to end of line 6
	45: Schedule 2, page 127, line 14, at end insert—
	“( ) before paragraph (za) insert—
	“(zza) the Bank of England makes a supplemental share transfer instrument under section 26,”;
	( ) after paragraph (za) insert—
	“(zb) the Treasury makes a supplemental share transfer order under section 27,”;
	( ) after paragraph (d) insert—
	“(dza) the Bank of England makes a supplemental property transfer instrument under section 42,”;”
	46: Schedule 2, page 127, leave out lines 18 and 19
	47: Schedule 2, page 127, line 21, at end insert—
	““( ) the Bank of England makes a supplemental resolution instrument under section 48U,”
	48: Schedule 2, page 127, line 23, at end insert “or”
	49: Schedule 2, page 127, line 25, leave out from “(3)” to end of line 27
	50: Schedule 2, page 127, line 27, at the end insert—
	“( ) in the heading, after “transfers” insert “etc”.”
	51: Schedule 2, page 128, line 4, after “require” insert “a resolution fund order,”
	52: Schedule 2, page 128, line 13, at end insert—
	“( ) to depend in part upon the amounts which are or may be payable under a resolution fund order;”
	53: Schedule 2, page 134, line 32, leave out “that provides for a transfer of securities”
	54: Schedule 2, page 134, line 33, leave out from “instrument” to end of line 35 and insert “;and in relation to a resolution instrument references in this section to a “transfer” are to a transfer of securities (whether made by that or another resolution instrument) and “transferor” and “transferee” are to be read accordingly.”
	55: Schedule 2, page 134, line 36, leave out paragraph 16
	Amendments 38 to 55 agreed.
	In the Title
	Amendment 56
	 Moved by Lord Deighton
	56:In the Title, line 7, leave out “for penalties to be imposed on” and insert “in relation to”
	Amendment 56 agreed.
	Motion
	 Moved by Lord Deighton
	That the Bill do now pass.

Lord Lawson of Blaby: My Lords, it is incumbent on us to respond to the very kind words of my noble friend Lord Deighton. As he said, the Bill has been completely transformed. I have been a Member of this House for a very long time now but I cannot recall a Bill—let alone a Bill as important as this one—to have been so totally transformed for the better. It is not only a great deal bigger but also a great deal better as a result of its passage through your Lordships’ House. I am extremely grateful and the nation will be extremely grateful.
	There has been a lot of nonsense talked about the excessive size of the banking sector in this country. Some people have been even as foolish as to talk about a monocrop economy. The fact of the matter is that banking accounts for a little over 5% of this country’s GDP; it is nothing like a monocrop economy. However, it is a supremely important sector and one in which we are world class.
	There is a size problem—I have not got time to go into it now and it would not be proper to do so—with individual institutions. As the former Governor of the Bank of England said, if an institution is too big to fail, it is too big. The size of the sector is a great strength of this country. As the present governor, Mr Carney, said recently, it is a great strength of the United Kingdom that we are prominent and world class in this growing and supremely important industry. We want it to grow further, which I hope it will. It is our great strength. It is what economists call the law of comparative advantage—you should do what you are best at—and this is a sector in which we are very good. However, if it is going to get bigger and bigger, which I think it will and should, it has to be both clean and robust. The purpose of the Parliamentary Commission on Banking Standards was to try to ensure that it would be both clean and robust. That is what the Bill is about.
	I say again how grateful I am to the Government, and particularly to my noble friend Lord Deighton, for having implemented so many of the recommendations
	of the Parliamentary Commission to ensure that the Bill leaves this House in an infinitely better state than when it arrived here.

Lord Eatwell: My Lords, the noble Lord, Lord Deighton, expressed the view that this was the final piece of the jigsaw in financial regulatory reform. He is going to be disappointed in that respect. What we have achieved is but a step on the road. Many issues have still not been addressed and many parts of the financial services industry have not been incorporated into the overall consideration of what is necessary as we move into the future with a successful and resilient banking system, to which the noble Lord, Lord Lawson, referred. More will need to be done.
	I add my thanks to those of the noble Lord, Lord Deighton, to the Parliamentary Commission on Banking Standards, and particularly the Members of this House—the noble Lords, Lord Lawson, Lord Turnbull and Lord McFall, the noble Baroness, Lady Kramer, and the most reverend Primate the Archbishop of Canterbury. They have done a fantastic job, as was discussed in the debate last Thursday, and they deserve the thanks of the whole House.
	I also thank those on this side of the House who have contributed so constructively to the discussion of the Bill—my noble friends Lord Watson, Lord Brennan, Lord Mitchell and Lady Hayter. I would particularly like to thank my noble friend Lord Tunnicliffe for keeping me in order, as he has done throughout this entire process. I would also like to thank our researcher, Miss Jessica Levy, who has worked alone, as opposed to having a team of officials. She has done the most remarkable job. She is a very talented person and we would not have been able to achieve what we have achieved and contributed from this side without her help.
	The noble Lord, Lord Higgins, who regrettably is not in his place at the moment, referred to the somewhat unfortunate process by which the Bill has got to this stage. The Treasury has made a bit of a shambles of it, really, and we have just been catching up through these various stages. I hope that when we next have a financial services Bill that, instead of having this elaborate and confusing process of continuously amending parts of FSMA, we have a proper coherent rewritten Bill to consider at the very beginning and that it is considered properly by both Houses in its passage.
	That critical comment about the Treasury has not diminished at all my pleasure in discussing the Bill with the noble Lord, Lord Deighton. Ageing professors typically take rather excessive proprietorial pride in the achievement of their pupils; all I can say at this stage is that I am delighted that my teaching of the noble Lord does not seem to have done him any permanent harm.
	Bill passed and returned to the Commons with amendments.

House adjourned at 11.21 pm.